HomeMy WebLinkAboutCS 12-07
REPORT TO
EXECUTIVE COMMITTEE
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Report Number: CS 12-07
Date: February 26, 2007
From:
Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject:
2007 Annual Repayment Limit for Debt and Financial Obligations
Recommendation:
That Report CS 12-07 of the Director, Corporate Services & Treasurer regarding the
2007 Annual Repayment Limit for Debt and Financial Obligations be received for
information.
Executive Summary: Not applicable
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 2007 Debt and Obligation Repayment Limit.
Debt for these purposes includes all forms of loans, leases and other long term financial
obligations and commitments. The 2007 Annual Repayment Limit (ARL) was
calculated based on 25 percent of 2005 net own-source revenues as reported in City of
Pickering's 2005 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.
The calculated 2007 ARL based on 25% of net revenue fund, after taking into account
net debt charges reported to MMAH is $12,415,661. This is based upon the 2005
Financial Information Return. Based on the 2007 Budget, the total annual principal and
interest charges and all other financial obligations as recorded in the City's books are
Report CS 12-07
February 26, 2007
Subject: 2007 Annual Repayment Limit for Debt
and Financial Obligations
Page 2
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$3,054,937 out of which $2,561,142 for the annual charges has been reported to the
MMAH as required. Taking into account the difference of $493,795 ($3,054,937 -
$2,561,142), being the amount included in the City's books for annual charges
pertaining to 2006 and 2007 borrowings ($405,995), and the balance ($87,800) for
photocopiers contracts, internal telephone financing and dealer financing of a small
vehicle, the net ARL available for 2007 would have to be reduced to $11,921,866.
The net ARL of $11,921,866 for 2007, as adjusted, represents the maximum additional
principal and interest payment for the year that. could be undertaken without 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, 2005 to commit to payments relating to debt and
financial obligations. The limit is effective January 1,2007.
For illustration purposes, if the City could borrow at 7%, the rate used by MMAH in the
calculation, the net ARL of $11,921,866 would allow it to undertake additional long
term borrowing as follows:
Terms
a) 5 years
b) 10 years
c) 15 years
d) 20 years
Debt Amount ($1
48,882,004
83,734,198
108,583,330
126,300,418
Attachments:'
1. Letter from the Ministry of Municipal Affairs and Housing dated January 16, 2007
Prepared By:
Approved I Endorsed By:
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....Gilli~=Pa1efs"on... ... .
Director, Corporate Services & Treasurer
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Caryn Kong
Senior Financial Analyst
GAP:ck
Attachment
Copy: Chief Administrative Officer
Report CS 12-07
February 26, 2007
Page 3
Subject: 2007 Annual Repayment Limit for Debt
C: 9 6: and Financial Obligations
Recommended for the consideration of
Pickering City Council
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@ Ontario
Ministry of
Municipal Affairs
and Housing
Ministere des
Affaires municipalns
et du Logement
Municipal Finance Branch
777 Bay Street, 13th Floor
Toronto ON M5G 2E5
Phone: (416) 585-6951
Fax: (416) 585-6315
777, Rue Bay, 13' etage
Toronto ON M5G 2E5
Telephone: (416) 585-6951
Telecopieur: (416) 585-6315
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January 16, 2007
Dear Municipal Treasurer, Clerk/Treasurer:
I am pleased to enclose a report showing your municipality's 2007 Annual Repayment Limit
(ARL) respecting long-term debt and financial obligations.
Your 2007 ARL was calculated based on 25 percent of your 2005 net own source revenues as
reported in your 2005 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 fUliher information, please contact the appropriate Municipal Services Office of
the Ministry of Municipal Affairs and Housing (list enclosed).
Yours truly,
~
Janet Hope
Director
Enclosures
1322(06/951
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Ministry of Municipal Affairs and Housing
777 Bay Street,
Toronto, Ontario,
M5G 2E5
A1inistc:re des affaires municipales et du logement
777 me Bay
Toronto (Ontario)
M5G 2E5
ANNUAL REPAYMENT LIMIT
(UNDER ONTARIO REGULATION 403/02)
MMA CODE: 10102
MUNID: 18001
MUNICIPALITY: Pickering C
UIIPER TIER: Durham R
REPAYMENT LIMIT: C$12,415,661
The repayment limit has been calculated based on data contained in the 2005 Financial Information Return, as submitted
to the Ministry. This limit represents the maximum amount which the municipality had available as of December 31,
2005 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, 2007.
FOR ILLUSTRATION PURPOSES ONLY,
the additionallong-tenn 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 8, 2007
DETERlVIINATION OF AN~r\L DEBT REPAY~IENTLI~lIT
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MC\'ICIPALITY: Pickering C
MMAH CODE: 10102
5.0 A.MOUNTS RECOVERED FROM UNCONSOLIDATED ENTITIES
5.1
5.2
5.3
5.4
ElectJicity (Principal)
Electricity (Interest)
Gas and Telephone (Principal)
Gas and Telephone (Interest)
SLC 74 3030 01
SLC 74 3030 02
SLC 74 3040 01 + SLC 74 3050 01
SLC 74 3040 02 + SLC 74 3050 02
o
o
o
o
01
5.5 SUBTOTAL
Add Lines 51 thru 5.4
6.0
PAYMENTS TO PROVINCE FOR DOWNTOWN
REVITALIZATION PROGRAM LOANS
SLC 425410 01
o
7.0
DEBT CHARGES FOR TILE DRAINAGE AND SHORELINE
ASSrSTAJ-JCE
SLC 40 1850 02 + SLC 40 1850 08
o
8.0
SUBTOTAL - DEBT CHARGES TO BE EXCLUDED
Add Lines 5.5,6.0,7.0
c
01
2,561,14211
9.0
NET DEBT CHARGES
Date J?:repared: January 8,2007
!age: 02 of 03
1 GODETERMINATION OF ANNUAL DEBT REPAYlVIENT LIl\1IT
MUNICIPALITY: Pickering C
MMAH CODE: 10102
10.0
TOTAL REVENUE FUND REVENUES
SLC 109910 01
60,384,097
11.0
FEES FOR REP A YING THE PROVINCE FOR DOWNTOWN
REVITALIZATION LOANS
SLC 42 5410 01
o
12.0
FEES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE
SLC 12 185004
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13.0 GRANTS FROM GOVERNMENT OF ONTARlO, GOVERNMENT
OF CANADA A."TD OTHER MUNICIPALITIES
13.1
13.2
13.3
Ontario Grants
Canada Grants
Other Municipalities
SLC 10 069901 + SLC 10081001
SLC 100820 OJ
SLC JO 109901
358,851
47,674
70,360
476,8851
13.4
SUBTOTAL
Add Lines 13.1 thm 13.3
14.0
FEES AND REVENUES FOR JOINT LOCAL BOARDS FOR
HOMES FOR THE AGED
o
15.0
NET REVENUE FUND REVENUES
Lines 10 less Lines 11,12,13.4,141
59,907,212/
14,976,803/
12,415,66111
16.0
25% OF NET REVENUE FUND REVENUE
17.0
ANNUAL REI' A YMENT LIMIT
25% of Net Revenue Fund Revenues less Net Debt Charges
II
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 17 above
would allow it to undertake additionallong-tenTI borrowing as follows:
7.0% Interest Rate:
(a) 20 years @ 7.0% p.a.
(b) 15 years @ 7.0% p.a.
(c) 10 years @ 7.0% p.a.
(d) 05 years @ 7.0% p.a.
131,531,690
113,080,773
87,202,407
50,906,661
9.0% Interest Rate:
(a) 20 years @ 9.0% p.a.
(b) 15 years @ 9.0% p.a.
(c) 10 years @ 9.0% p.a.
(d) 05 years @ 9.0% p.a.
1] 3,336,928
100,078,775
79,679,462
48,292,591
Page: 03 of 03
Date Prepared: January 8, 2007