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Home My WebLink AboutCS 11-09 City, REPORT TO EXECUTIVE COMMITTEE PICKERING Report Number: CS 11-09 Date: May 11, 2009 a 69 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2009 Annual Repayment Limit for Debt and Financial Obligations Recommendation: That Report CS 11-09 of the Director, Corporate Services & Treasurer regarding the 2009 Annual Repayment Limit for Debt and Financial Obligations be received for information. Executive Summary: The Annual Repayment Limit presented in this report represents the maximum amount which the City has available to commit to payments relating to debt and financial obligations. 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 2009 Debt and Obligation Repayment Limit. Debt for these purposes includes all forms of loans, leases and other long term financial obligations and commitments. The 2009 Annual Repayment Limit (ARL) was calculated based on 25 percent of 2007 net own-source revenues as reported in City of Pickering's 2007 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. Report CS 11-09 May 11, 2009 Subject: 2009 Annual Repayment Limit for Debt Page 2 ,f l and Financial Obligations The calculated 2009 ARL based on 25% of net revenue fund, after taking into account net debt charges reported to MMAH is $11,699,320. This is based upon the 2007 Financial Information Return. Based on the 2009 Budget, the total annual principal and interest charges and all other financial obligations as recorded in the City's books are $4,265,968 out of which $3,028,718 for the annual charges has been reported to the MMAH as required. Taking into account the difference of $1,237,250 ($4,265,968 - $3,028,718), being the amount included in the City's books for annual charges pertaining to borrowings from 2008 to 2009 ($1,193,517), and photocopiers contracts ($43,733), the net ARL available for 2009 would have to be reduced to $10,462,070. The net ARL of $10,462,070 for 2009, as adjusted, represents the maximum additional principal and interest payment for the year that could be undertaken without the 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, 2008 to commit to payments relating to debt and financial obligations. The limit is effective January 1, 2009. For illustration purposes, if the City could borrow at 7%, the rate used by MMAH in the calculation, the net ARL of $10,462,070 would allow it to undertake additional long term borrowing as follows: Terms Debt Amount a) 5 years 42,896,552 b) 10 years 73,481,201 c) 15 years 95,287,634 d) 20 years 110,835,318 Attachment: 1. Letter from the Ministry of Municipal Affairs and Housing dated January 5, 2009 Report CS 11-09 May 11, 2009 Subject: 2009 Annual Repayment Limit for Debt Page 3 and Financial Obligations 171 Prepared By: Approved / Endorsed By: 1 Caryn Kong Gillis A. Paterson Senior Financial Analyst Director, Corporate Services & Treasurer GAP:ck Copy: Chief Administrative Officer Recommended for the consideration of Pickering City Council Thomas J..Qui , RDMR., CMM III Chief Adminis rative Officer %1-TA :HMENT#~TO PORT# -2-5 11-03 Flo- 1 72 Ministry of Ministere des } Municipal Affairs Affaires municipales Ontario and Housing et du Logement Municipal Finance Policy Branch 777 Bay Street, 13th Floor 777, Rue Bay, 131 etage Toronto ON M5G 2E5 Toronto ON M5G 2E5~~~ Phone: (416 585-6310 Tele hone: ®F p (416) 585-6310 '41 , Fax: (416) 585-6315 Telecopieur: (416) 585-6315 January 5, 2009 Dear Municipal Treasurer, C1 erk/Trea surer: I am pleased to enclose a report showing your municipality's 2009 Annual Repayment Limit (ARL) respecting long-term debt and financial obligations. Your 2009 ARL was calculated based on 25 percent of your 2007 net own source revenues as reported in your 2007 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 trolly Frances Johnston Director (A) Enclosures 1322)06/95) 173 Ministry of Municipal Affairs and Housing Ministere des affaires manzicipales et du logement 777 Bay Street, 777 rue Bay Toronto, Ontario. Toronto (Ontario) MSG 2E5 MSG 2E5 ANNUAL REPAYMENT LIMIT (UNDER ONTARIO REGULATION 403/02) MMA CODE: 10102 MUNID: 18001 MUNICIPALITY: Pickering C UPPER TIER: Durham R REPAYMENT LIMIT: C $11,699,320 The repayment limit has been calculated based on data contained in the 2007 Financial Information Return, as submitted to the Ministry. This limit represents the maximum amount which the municipality had available as of December 31, 2007 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, 2009. 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 5, 2009 4 DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT MUNICIPALITY: Pickering C MMAH CODE: 10102 1.0 GROSS DEBT CHARGES 1.1 Principal SLC 74 3099 01 2,358,938 1.2 Interest SLC 74 3099 02 669,780 1.3 SUBTOTAL Add Lines 1. 1, 1.2 3,028,718 2.0 DEBT CHARGES ON O.C.W.A. PROVINCIAL PROJECT 2.1 Water Projects this municipality only SLC 74 2810 03 0 2.2 Water Projects share of integrated project(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 2.1 thru 2.4 3.0 PAYMENT IN RESPECT OF LONG TERM COMMITMENTS AND LIABILITIES SLC 42 6010 01 0 4.0 SUBTOTAL - DEBT CHARGES Add Lines 1.3,2.5,3.0 3,028,718 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 3050 02 0 5.5 SUBTOTAL Add Lines 5.1 thru 5.4 0 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 SUBTOTAL - DEBT CHARGES TO BE EXCLUDED Add Lines 5.5,6.0,7.0 0 9.0 NET DEBT CHARGES 3,028,718 Page: 02 of 03 Date Prepared: January 5, 2009 DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT 175 MUNICIPALITY: Pickering C MMAH CODE: 10102 10.0 TOTAL REVENUE FUND REVENUES SLC 10 9910 01 59,403,743 11.0 FEES FOR REPAYING THE PROVINCE FOR DOWNTOWN REVITALIZATION LOANS SLC 42 5410 01 0 12.0 FEES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 12 1850 04 0 13.0 GRANTS FROM GOVERNMENT OF ONTARIO, GOVERNMENT OF CANADA AND OTHER MUNICIPALITIES 13.1 Ontario Grants SLC 10 0699 01 + SLC 10 0810 01 241,569 13.2 Canada Grants SLC 10 0820 01 92,156 13.3 Other Municipalitics SLC 10 1099 Of 157,866 13.4 SUBTOTAL Add Lines 13.1 thru 13.3 491,591 14.0 FEES AND REVENUES FOR JOINT LOCAL BOARDS FOR HOMES FOR THE AGED 0 15.0 NET REVENUE FUND REVENUES Lines 10 less Lines 11,12,13.4,14 58,912,152 16.0 25% OF NET REVENUE FUND REVENUE 14,728,038 17.0 ANNUAL REPAYMENT LIMIT 25% of Net Revenue Fund Revenues less Net Debt Charges 11,699,320 SLC denotes Schedule, Line, Column FOR ILLUSTRATION PURPOSES ONLY If the municipality could borrow at 7.0% or 9.0% annually, the annual repayment limit shown in Line 17 above would allow it to undertake additional long-term borrowing as follows: 7.0% Interest Rate: (a) 20 years @ 7.0% p.a. 123,942,763 (b) 15 years @ 7.0%p.a. 106,556,400 (c) 10 years @ 7.0% p.a. 82,171,128 (d) 05 years @ 7.0% p.a. 47,969,522 9.0% Interest Rate: (a) 20 years @ 9.0% p.a. 106,797,777 (b) 15 years @ 9.0% p.a. 94,304,573 (c) 10 years @ 9.0%p. a. 75,082,231 (d) 05 years @ 9.0%p.a. 45,506,275 Page: 03 of 03 Date Prepared: January 5, 2009