HomeMy WebLinkAboutCS 49-04PICKERING
REPORT TO
EXECUTIVE COMMITTEE
Report Number: CS 49-04
Date: November 9, 2004
From:
Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject: 2005 Temporary Borrowing By-law
Recommendation:
That Report CS 49-04 from the Director, Corporate Services & Treasurer be
received; and that:
the temporary borrowing limit to meet 2005 current expenditures pending receipt of
taxes and other revenues be established at $25,000,000 for the period January 1,
2005 to September 30, 2005 inclusive, and $12,500,000 thereafter until December
31,2OO5;
3. the temporary borrowing limit for capital purposes for 2005 be established at
$15,000,000;
the attached By-law be read three times and passed; and,
the appropriate officials of the City of Pickering be authorized to take the necessary
actions to give effect thereto.
Executive Summary: Not applicable
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. An
estimate will be provided at a later date in the 2005 Current Budget. With internal
borrowings being undertaken to the maximum advisable, we will be resorting to
external borrowing from the Region in 2005 for approved expenditures. For Current
purposes, the $24 million limit for 2004 has been increased to $25 million for 2005 and
the $12 million has been increased to $12.5 million. The limit for Capital purposes has
been increased from $13 million for 2004 to $15 million for 2005. This may have to be
adjusted once 2005 Capital budget has been approved.
Report CS 49-04
Subject: 2005 Temporary Borrowing By-law
Date:
November9,2004
Page 2
Background: The borrowing of funds for current and capital purposes may
become necessary during the normal course of operations during 2005. Under the
provisions of Section 407 of the Municipal Act, 2001, (the Act), the Council of the City of
Pickering 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, for capital projects pending permanent financing, including
the issuance of debentures by the Region.
Current Budqet Financinq:
The amount of such temporary borrowing outstanding at any one time is generally
limited by the Act, unless otherwise approved by the Ontario Municipal Board, 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 calculated upon
the revenues set forth in the estimates adopted for the next preceding year. Based
upon the 2004 estimates of the Corporation, the allowable level of temporary borrowing
outstanding under legislation is estimated at $25,000,000 from January 1 to September
30 and $12,500,000 thereafter.
The requested $25,000,000 should be sufficient to meet the current expenditures of the
City until the levies for 2005 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 Financin.q:
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 the Treasurer to obtain additional temporary interim financing (internal or external)
for capital projects approved by Council. The $15 million capital borrowing limit would
provide sufficient funds to cover the estimated 2005 capital expenditures.
Attachments:
1. 2005 Temporary Borrowing By-law
Report CS 49-04
Subject: 2005 Temporary Borrowing By-law
Date:
November 9, 2004
Page 3
Prepared By:
Caryn Kong
Senior Financial Analyst
Approved / Endorsed By:
A. Paterson
Director, Corporate Services & Treasurer
:ck
Attachment
Copy: Chief Administrative Officer
Recommen,ded/fo~ th ideration of
Pickering C~
Thomas J. dministrative Officer
THE CORPORATION OF THE CITY OF PICKERING
BY-LAW NO.
Being a by-law to authorize the temporary
borrowing of moneys to meet the current and
capital expenditures of the City of Pickering
for the year 2005.
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 Municipality
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 Municipality for the year,
including the amounts required for principal and interest falling due within the year upon
any debt of the Municipality, and the sums required by-law to be provided by the
Council for any local board of the Municipality; and,
WHEREAS Section 407(2) limits the total of such borrowings to not exceed 50 per cent
of the estimated annual revenues from January 1, 2005 to September 30, 2005 and 25
per cent thereafter; and,
WHEREAS it is deemed necessary by the said Council to borrow the sum of twenty five
million dollars ($25,000,000) to meet, until the taxes for the current year are received,
the current expenditures of the Municipality for the year 2005, including the amounts
and sums aforesaid; and,
WHEREAS the said sum of twenty five million dollars ($25,000,000) 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 Municipality from January 1 to September 30 as set forth in
the estimates adopted by the said Council for the year 2004 exclusive of revenues
derivable from the sale of assets, borrowings or issues of debentures or from a surplus
including arrears of levies and $12,500,000 is less than 25 per cent thereafter; and,
WHEREAS the Municipal Act 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 said Council to borrow the sum of fifteen
million dollars ($15,000,000) to meet the capital expenditures approved by Council.
NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE CITY OF
PICKERING HEREBY ENACTS AS FOLLOWS:
The Mayor and 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 twenty
five million dollars ($25,000,000) to meet, until the levies for the year 2005 are
received, the current expenditures of the Municipality for such year, including the
amounts required for principal and interest falling due within the year upon any debt
of the Municipality for the period January 1, 2005 to September 30, 2005 inclusive
and $12,500,000 thereafter until December 31, 2005.
The Mayor and 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 in all the
sum of fifteen million dollars ($15,000,000) to meet the capital expenditures as
approved by Council, of the Municipality including the amounts required for principal
and interest.
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 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 2005.
BY-LAW read a first, second and third time and finally passed this 20 day of December,
2004.
David Ryan, Mayor
Bruce Taylor, Clerk