HomeMy WebLinkAboutCST 10-12
135
City o~ Report To
Executive Committee
PICKERING Report Number: CST 10-12
Date: May 14, 2012
From: Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject: 2012 Annual Repayment Limit for Debt and Financial Obligations
Recommendation:
That Report CST 10-12 of the Director, Corporate Services & Treasurer regarding the
2012 Annual Repayment Limit for Debt and Financial Obligations be received for
information.
Executive Summary: The Annual Repayment Limit presented in this report
represents, under a Provincial formula, the maximum amount which the City has
available to commit to payments relating to debt and financial obligations. 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. The Municipal Act delegates the authority to the Treasurer and
provides that the Treasurer can certify the appropriateness of funding for each capital
project involving debt, lease or other form of long term financial commitment as long as
certain criteria are met. Otherwise, Ontario Municipal Board approval is required.
Financial Implications: There are no financial implications associated with this
report.
Discussion: Recently, the Ministry of Municipal Affairs and Housing (MMAH)
provided information regarding the City's 2012 Debt and Obligation Repayment Limit.
Debt for these purposes includes all forms of loans, leases and other long term financial
obligations and commitments. The 2012 Annual Repayment Limit (ARL) was calculated
based on 25 percent of 2010 net own-source revenues as reported in City of Pickering's
2010 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 CST 09-12. May 14, 2012
136
Subject: 2012 Annual Repayment Limit for Debt. Page 2
and Financial Obligations
The calculated 2012 ARL based on 25% of net revenue after taking into account net
debt charges, is $14,973,156. This is based on the 2010 Financial Information Return
which included the total annual principal and interest charges and all other financial
obligations as recorded in the City's books of $2,375,310. However, for City purposes
staff have chosen to update this number, as we have in past years, to take into account
debt incurred in 2011 and the resultant increase in annual debt charges of $1,793,272
thereby reducing the 2012 ARL to $13,179,884. This represents the maximum
additional principal and interest payments that could be undertaken without requiring
Ontario Municipal Board approval. As at December 31, 2011 the City had $19,131,687
in external debt and $806,848 in internal loans for a total of $19,938,535.
It must be pointed out that this calculation does not: measure affordability; take into
account other commitments the City may have; identify the need to change levels of
service or the amount property taxes must be -increased to repay the new debt. This
limit represents the maximum amount which the municipality has available for approval
and certification by the Treasurer as of December 31, 2011 to commit to payments
relating to debt and financial obligations. The limit is effective January 1, 2012 for the
calendar year.
For illustration purposes, if the City could borrow at 5%, the rate used by MMAH in the
calculation, the net ARL of $13,179,884 would allow it to undertake additional long term
borrowing as follows:
Term (years) Debt Amount
a) 5 57,062,000
b) 10 101,770,000
c) 15 136,800,000
d) 20 166,250,000
Attachment:
1. Letter from the Ministry of Municipal Affairs and Housing dated January 3, 2012
Prepared By: Approved / Endorsed By:
Caryn Kong, CGA Gillis A. Paterson,
Senior Financial Analyst - Capital & Director, Corporate Services & Treasurer
Debt Management
Copy: Chief Administrative Officer
Report CST 09-12 May 14, 201
137
Subject: 2012 Annual Repayment Limit for Debt Page 3
and Financial Obligations
Recommended for the consideration of
Pickering ity Council
2, 21 /Z
Tony Prevedel, P. Eng.
Chief Administrative Officer
ATTACH MENT# TO REPORT #.LV
Ministry of Minist6re des
Municipal Affairs Affaires municipales
t a r i (c)
and Housing et du Logement
138
Municipal Finance Policy Branch Direction des politiques relatives aux finances municipales
777 Bay Street, 13th Floor 777, rue Bay, 13.1 etage
Toronto ON M5G 2E5 Toronto ON M5G 2E5
Phone: 416 585-6951 Telephone : 416 585-6951 RECEIVED
CITY OF PICKERtNQ
Fax: 416 585-6315 Telecopieur : 416 585-6315.
APR 2 7 2011
April 20, 2011 CORPORATE SERVM
Dear Municipal Treasurer, Clerk/Treasurer:
I am pleased to enclose a report showing your municipality's 2011 Annual Repayment Limit
(ARL) respecting long-term debt and financial obligations. Your 2011 ARL was calculated based
on 25 percent of your 2009 net own source revenues as reported in your 2009 FIR.
If you require any further information, please contact the appropriate Municipal Services Office of
the Ministry of Municipal Affairs and Housing (list enclosed).
Yours truly,
Trevor Bingler
Director
Enclosures
r~~ 1 3
~ - Ontario
Ministry of Municipal Affairs and Housing Ministere des offaires municipales et du logement
777 Bay Street, 777 rue Bay,
Toronto, Ontario M5G 2E5 Toronto (Ontario) M56 2E5
MMAH CODE: 10102 FIR CLEAN FLAG C
+ r a
MUNID:. 18001
MUNICIPALITY: ' Pickering C
UPPER TIER: Durham R
REPAYMENT LIMIT: $ 14,081,357
The repayment limit has been calculated based on data contained in the 2009 Financial Information Return, as submitted to the
Ministry. This limit represents the maximum amount which the municipality had available as of December 31, 2009 to commit to
payments relating to debt and financial obligation. 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, 2011.
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 show.
If the municipalities could borrow at 5% drr,7% annuallY, the annual repayment limits shown above.would allow it to
undertake additional long-term borrowing as follows:
(a) 20 years @ 5% p.a. $ 175,484,833
(a) 15 years @ 5% p. a. $ 146,159,670•,.
(a) 10 years @.5% p.a. $ 108,732,506.
(a) 5 years C~. 5% p.a $ 60,964,907
(a) 20 years @ 7% p. a. - 149;178,097
(a) 15 years '@ 7% p. a. $ 128,251,789
(a) 10 years @ 7% p.a.. $ 98,901,559
(a) 5 years C 7% p.a 5 57,736,344"
RMW
L l - '.1fi , ~ ::tom C t N F L~C 1: ET
Debt.Charges for the Current Year -
0210 Principal.(SLC74309901) [ ~ _ _ - 1,891,393
0220 Interest (SLC 74 3099 02). . . . . . . . . . . . . . : 7_42,139
;
0299 Subtotal 2,633,532
Ontario Clean. Water Agency Provincial Projects
0410 Water projects - For this Municipality only,(SLC 74 281003). 0
0420 Water projects'- Share of integrated project(s)"(SLC 74 2820 03).a 0
0430 Wastewater projects - For this Municipality only (SLC 74 2830 03). . . . . .
0440 Wastewater projects Share of integrated project(s) (SLC 74 2840 03). . . . !
0499 Subtotal 0 .
0610% ' Payments for Long Term Commitments and Liabilities financed from the consolidated statement of
0
operations (SLC 426010 01) . . . . .
0810 Debt Charges for Lease Purchase Agreements (Tangible Capital Leases) (SLC 74 3140 03) . . . .m
9910 Total Debt Charges 3 2,633 532
Amounts Recovered from Unconsolidated Entities
1010 Electricity Principal '(SLC 74 3030 01) . .
1020 Electricity - Interest (SLC 74 3030 02) . 0
1030 Gas Principal (SLC'74 3040 01) . • • I 0
1040 - Gas - Interest (SLC 74 304002) . . 'LL.. . .
i
1050 Telephone - "Principal (SLC 74 3050 01) . . . . . . . . . . . . . . . 0
1060 Telephone Interest (SLC 74 3050 02) . . . ( .mw~ 0
1099 Subtotal
1410 Debt Charges for Tile'Drainage/Shoreline Assistance (SLC 74 3015 01 + SLC 74 3015 02) . 0
1420 s Total Debt Charges to be Excluded wo
71-
Net Debt Charges 2,633,532
9920
SLI.
Total Revenues ( Excluding Donations of Tangible Capital Assets)
1610 73,084,158 .
(SLC 1.0 991001 - SLC 53 06i0 01) . . . . . .
2010 Fees for Tile Drainage / Shoreline Assistance (SLC 12 1850 04) . ~0
Grants from, Government of Ontario, Canada and Other Municipalities.,.
2210 Ontario :Grants, including Grants for Tangible Capital Assets (KC 10 0699 01. + SLC110 0810,01 . t SLC10 0815 01) { 1,546,045
2220 Canada Grants, including Grants for Tangible Capital Assets (SLC 10 0820 01 + SLC 10 0825 01) : 3,534,919
2230 Revenue from other municipalities (SLC 10 1099 01) . . . 129,918
2240 Gain/Loss on sale of land li capital assets (SLC 10 1811 01) 46,758
2250 Deferred revenue earned" (Development Charges) (SLC 10 8812 01) . . . . . . i 966,962
2299 r Subtotal X6,224 602
2410 Fees and Revenue for Joint Local Boards for Homes for the Aged . . .0
2610 Net Revenues 66,859 556
2620 25% of Net Revenues 16,714,889
9930 ESTIMATED ANNUAL REPAYMENT LIMIT i 142081,357
(25% of Net Revenues less Net Debt Charges) "
' SLC denotes Schedule, Line Column.
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