HomeMy WebLinkAboutCST 33-12 Citq 00 _ Report To
1' Executive Committee
PICKERING Report Number: CST 33-12
Date: December 3, 2012
From: Paul Bigioni
Director, Corporate Services & City Solicitor
Subject: 2013 Temporary Borrowing By-law
Recommendation:
1. That Report CST 33-12 from the Director, Corporate Services & City Solicitor be
received;
2. That the temporary borrowing limit to meet 2013 current expenditures pending
receipt of taxes and other revenues be established at $38,000,000 for the period
January 1, 2013 to September 30, 2013 inclusive, and $19,000,000 thereafter
until December 31, 2013;
3. That the temporary borrowing limit for capital purposes for 2013 be established at
$47,000,000;
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: Staff recommend that Council approve temporary 2013
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 2013, 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.
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 (Region) in 2013 for approved capital expenditures.
Report CST 33-12 December 3, 2012
Subject: 2013 Temporary Borrowing By-law Page 2
For current purposes, the $36 million limit for 2012 has been increased to $38 million for
2013 and the $18 million has been increased to $19 million. The limit for capital
purposes for 2013 has been established at $47 million based on the draft (dated
November 1, 2012) of the 2013 Capital Budget. This may have to be adjusted once the
2013 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 2013. 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
2012 estimates of the Corporation, the allowable level of temporary borrowing
outstanding under the Act is estimated at $38 million from January 1 to September 30
and $19 million thereafter.
The requested $38 million should be sufficient to meet the current expenditures of the
City until the levies for 2013 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 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
projects approved by Council. The $47 million capital borrowing limit should provide
sufficient funds to cover the estimated 2013 capital expenditures.
Report CST 33-12 December 3, 2012
Subject: 2013 Temporary Borrowing By-law Page 3
Attachment:
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 2013
Prepared By: Approved / Endorsed By:
Caryn ong, CGA Stan Karwowski, MBA, CMA
Senior Financial Analyst- Capital & (Acting) Division Head, Finance & Treasurer
Debt Management
Paul Bigioni
Director, Corpora - • - -s & City Solicitor
Copy: Chief Administrative Officer
Recommended for the consideration
of Pickering City Council /
l ,rD ^r a ?- 20, 2-042.
Tony Prevedel, P.Eng.
Chief Administrative Officer
ATTACHMENT#_/,_TO REPORT# 33--t a
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 2013.
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, 2013 to September 30, 2013 and 25%
thereafter;
Whereas it is deemed necessary by the said Council to borrow the sum of thirty-eight
million ($38,000,000) to meet, until the taxes for the current year are received, the
current expenditures of the City for the year 2013, including the amounts and sums
aforesaid;
Whereas the said sum of thirty-eight million ($38,000,000) 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 2012 exclusive of revenues derivable from the sale
of assets, borrowings or issues of debentures or from a surplus including arrears of
levies, and nineteen million dollars ($19,000,000) 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 forty-seven million
($47,000,000) 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:
The Mayor and (Acting) 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 thirty-eight million ($38,000,000) to meet, until the levies for the
year 2013 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, 2013 to September 30, 2013 inclusive and nineteen
million dollars ($19,000,000) thereafter until December 31, 2013.
1. The Mayor and (Acting) 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-seven million ($47,000,000) 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, 2013.
By-law passed this 10th day of December, 2012.
David Ryan, Mayor
Debbie Shields, City Clerk