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Home My WebLink AboutCS 40/01 - REPORT TO COUNCIL. FROM: Gillis A. Paterson Director, Corporate Services & Treasurer DATE: November 19, 2001 REPORT NUMBER: CS 40-01 SUBJECT: 2002 Temporary Borrowing By-Law RECOMMENDATION: 1. It is recommended that Report CS 40-01 of the Director, Corporate Services & Treasurer be received; 2. The temporary borrowing limit to meet 2002 current expenditures pending receipt of taxes and other revenues be established at $21,000,000 for the period January 1,2002 to September 30, 2002 inclusive, and $10,000,000 thereafter until December 31, 2002; 3. The temporary borrowing limit for capital purposes for 2002 be established at $12,000,000; 4. The attached By-Law be read three times and passed; and, 5. The appropriate officials of the City of Pickering be authorized to take the necessary actions to give effect thereto. ~ ORIGIN: Director, Corporate Services & Treasurer AUTHORITY: The Municipal Act, RSO 1990, as amended, Section.187 and 188 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 2002 Current Budget. In past years no extemal temporary borrowings have been necessary, however, there have been intemal borrowings. For current purposes, the $18 million limit for 2001 has been increased to $21 million for 2002 and the $9 million has been increased to $10 million. The limit for Capital purposes has been maintained as in last year at $12 million. This may have to be adjusted once 2002 Capital budget has been approved. EXECUTIVE SUMMARY: Not applicable - Report to Council CS 40-01 Date: November 19,2001 Subject: 2001 Temporary Borrowing By-Law Page 2 - BACKGROUND: The borrowing of funds for current and capital purposes may become necessary during the normal course of operations during 2002. Under the provisions of Section 187 of the Municipal Act, R.S.O. 1990, (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 Section 188 of 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 Budget Financing: The amount of such temporary borrowing outstanding at anyone 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 2001 estimates of the Corporation, the allowable level of temporary borrowing outstanding under legislation is estimated at $21,000,000 from January 1 to September 30 and $10,000,000 thereafter. The requested $21,000,000 should be sufficient to meet the current expenditures of the City until the levies for 2002 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. - Caoital Budget Financing: Borrowing for capital purposes under Section 188 of 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 2 provides the authority for the Treasurer to obtain additional temporary interim financing (internal or external) for capital projects approved by Council. The $12 million capital borrowing limit would provide sufficient funds to cover prior years and estimated 2002 capital expenditures. A TT ACHMENTS: 1. Temporary Borrowing By-Law Prepared By: ApprovedJEndorsed By: ...-K~ Caryn Kong Senior Financial Analyst ~~~ -- Gillis A. Paterson, Director, Corporate Services & Treasurer GAP:vw Recommended for the consideration of Pickering City Council ......... Thomas J. Quinn, Chief Administrative Officer THE CORPORATION OF THE CITY OF PICKERING ;..'" BY-LAW NO. 5925 /01 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 2002. WHEREAS Section 187 of the Municipal Act 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 187(2) limits the total of such borrowings to not exceeding 50 per cent of the estimated annual revenues from January 1, 2002 to September 30, 2002 and 25 per cent thereafter; and, WHEREAS it is deemed necessary by the said Council to borrow the sum of twenty-one million dollars ($21,000,000) to meet, until the taxes for the current year are received, the current expenditures of the Municipality for the year 2002, including the amounts and sums aforesaid; and, - WHEREAS the said sum of twenty-one million dollars ($21,000,000) 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 2001 exclusive of revenues derivable from- the sale of assetE;, borrowings or issues of debentures or from a surplus including arrears of levies and $10,000,000 is less than 25 per cent thereafter; and, WHEREAS Section 188 of 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 twelve million dollars ($12,000,000) to meet the capital expenditures approved by Council. NOW THEREFORE THE COUNCn. OF THE CORPORATION OF THE CITY OF PICKERING HEREBY ENACTS AS FOLLOWS: 1. The Mayor and Treasurer of the City of Pickering be and they are hereby authorized to borrow from time to time by way of promissory notes a sum or sums not exceeding twenty-one million dollars ($21,000,000) to meet, until the levies for the year 2002 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, 2002 to September 30, 2002 inclusive and $10,000,000 thereafter until December 31, 2002. CERT.~F!J2D A TRUE COpy 1 /Z/ 1 ,//./'1 L- ; _..L2/' / -~ :&!ttlCE iAYLOR C. . " City of Pickering . nY-Clerk -. nll~, PHOTOCOPY CONFORMS 'n;.;I~-,C:RlGlNAL DOCUMENT --;'~NOT BEEN ALTERED '"Ai ~, 2. The Mayor and Treasurer of the City of Pickering be and they 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 twelve million dollars ($12,000,000) to meet the capital expenditures as approved by Council, of the Municipality 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 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 2002. BY-LAW read a fIrst, second and third time and finally passed this 3rd day of December, 2001. ~'--- ~~ Wayne Arthurs, Mayor '- #;"--- liiruce Taylor, Clerk ".. -