HomeMy WebLinkAboutFIN 16-20Report to
Executive Committee
Report Number: FIN 16-20
Date: December 7, 2020
From: Stan Karwowski
Director, Finance & Treasurer
Subject: 2021 Temporary Borrowing By-law
Recommendation:
1. That the temporary borrowing limit of $55 million be established to meet 2021
current expenditures pending receipt of taxes and other revenues for the period of
January 1 to September 30, 2021 inclusive, and $27 million thereafter until
December 31, 2021;
2. That the temporary borrowing limit for capital purposes for 20 21 be established at
$63 million;
3. That the attached draft by-law providing for the temporary borrowing of monies be
enacted; and
4. That the appropriate City of Pickering officials be authorized to take the necessary
actions as indicated in this report.
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Executive Summary: Staff recommend that Council approve temporary 2021
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 2021, 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. The approval of this report and the attached By-law will
provide the City with financial flexibility to deal with unanticipated negative events . Put
another way, this report provides the City with a financial safety net.
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 . The City
will undertake external borrowing from The Regional Municipality of Durham (the
“Region”) in 2021 for approved capital expenditures. For current purposes, the $53
million limit for January 1 to September 30, 2020 has been increased to $55 million for
Report FIN 16-20 December 7, 2020
Subject: 2021 Temporary Borrowing By-law Page 2
January 1 to September 30, 2021 and the $26 million limit for October 1 to December
31, 2021 has been increased to $27 million for October 1 to December 31, 2021.
The limit for capital purposes for 2021 has been established at $63 million based on the
draft 2021 Capital Budget dated November 4, 2020. The actual amount to borrow may
have to be adjusted once the 2021 Capital Budget has been approved by Council.
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Discussion: The borrowing of funds for current and capital purposes may become
necessary in the normal course of operations during 2021. 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 of the
City of Pickering (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 Local Planning Appeal Tribunal (LPAT), 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 calc ulated upon the
revenues set forth in the estimates adopted for the preceding year. Based upon the
2020 estimates of the Corporation, the allowable level of temporary borrowing
outstanding under the Act is estimated at $55 million from January 1 to September 30
and $27 million thereafter.
The requested $55 million should be sufficient to meet the current expenditures of the
City until the levies for 2021 are received. It is expected 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 $63 million capital borrowing limit should provide
sufficient funds to cover the estimated 2021 capital expenditures.
Report FIN 16-20 December 7, 2020
Subject: 2021 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 2021
______________________________________________________________________
Prepared By: Approved/Endorsed By:
Original Signed By: Original Signed By:
Caryn Kong, CPA, CGA Stan Karwowski, MBA, CPA, CMA
Senior Financial Analyst – Capital & Director, Finance & Treasurer
Debt Management
Recommended for the consideration
of Pickering City Council
Original Signed By:
Marisa Carpino, M.A.
Interim Chief Administrative Officer
Attachment #1 to Report #FIN 16-20
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 2021.
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 C ity,
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 per cent of
the estimated annual revenues from January 1 to September 30, and 25 per cent
thereafter;
Whereas it is deemed necessary by the said Council to borrow the sum of fifty-five
million dollars ($55,000,000) to meet, until the taxes for the current year are received,
the current expenditures of the City for the year 2021, including the amounts and sums
aforesaid;
Whereas the said sum of fifty-five million dollars ($55,000,000) 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 City from January 1 to September 30 as set forth in the
estimates adopted by the Council for the year 20 20 exclusive of revenues derivable
from the sale of assets, borrowings or issues of debentures or from a surplus including
arrears of levies, and twenty-seven million dollars ($27,000,000) is less than 25 per
cent 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 sixty-three million
dollars ($63,000,000) 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:
1. The Mayor and Director, 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 f ifty-five
million dollars ($55,000,000) to meet, until the levies for the year 2021 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 to
September 30, 2021 inclusive and twenty-seven million dollars ($27,000,000) thereafter until
December 31, 2021.
2. The Mayor and Director, 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 sixty-three
million dollars ($63,000,000) 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, 2021.
By-law passed this 14th day of December, 2020.
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David Ryan, Mayor
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Susan Cassel, City Clerk