The URL can be used to link to this page

Home My WebLink AboutCST 23-11 eitq o~ Report To Executive Committee PICKERING Report Number: CST 23-11 55 Date: June 13, 2011 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2011 Annual Repayment Limit for Debt and Financial Obligations Recommendation: That Report CST 23-11 of the Director, Corporate Services & Treasurer regarding the 2011 Annual Repayment Limit for Debt and Financial Obligations be received for information. Executive Summary: The Annual Repayment Limit presented in this report represents, under a Provincial formula, the maximum amount which the City has available to commit to payments relating to debt and financial obligations. 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. The Municipal Act provides that the Treasurer can certify the appropriateness of funding for each capital project involving debt, lease or other form of long term financial commitment. Otherwise, Ontario Municipal Board approval is required. Financial Implications: There are no financial implications associated with this report. Sustainability Implications: There are no sustainability implications associated with this report. Background: Recently, the Ministry of Municipal Affairs and Housing (MMAH) provided information regarding the City's 2011 Debt and Obligation Repayment Limit. Debt for these purposes includes all forms of loans, leases and other long term financial obligations and commitments. The 2011 Annual Repayment Limit (ARL) was calculated based on 25 percent of 2009 net own-source revenues as reported in City of Pickering's 2009 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 Report CST 23-11 June 13, 2011 Subject: 2011 Annual Repayment Limit for Debt Page 2 and Financial Obligations 156 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 2011 ARL based on 25% of net revenue fund, after taking into account net debt charges reported to MMAH, is $14,081,357. This is based on the 2009 Financial Information Return which included $2,633,532, being the total annual principal and interest charges and all other financial obligations as recorded in the City's books. However, for City purposes staff have chosen to update this number, as we have in past years, to take into account debt incurred in 2010 and the resultant increase in annual debt charges of $1,147,962 thereby reducing the 2011 ARL to $12,933,395. This represents the maximum additional principal and interest payments that could be undertaken without requiring Ontario Municipal Board approval. It must be pointed out that this calculation does not: measure affordability; take into account other commitments the City may have; 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, 2010 to commit to payments relating to debt and financial obligations. The limit is effective January 1, 2011 for the calendar year. For illustration purposes, if the City could borrow at 5%, the rate used by MMAH in the calculation, the net ARL of $12,933,395 would allow it to undertake additional long term borrowing as follows: Term (years) Debt Amount a) 5 55,900,000 b) 10 99,800,000 c) 15 134,200,000 d) 20 161,100,000 Attachment: 1. Letter from the Ministry of Municipal Affairs and Housing dated April 20, 2011 Prepared By: Approved / Endorsed By: Caryn Kong, CGA Gillis A. Paterson, CMA Senior Financial Analyst - Capital & Director, Corporate Services & Treasurer Debt Management Report CST 23-11 June 13, 2011 Subject: 2011 Annual Repayment Limit for Debt Page 3 and Financial Obligations 157 Copy: Chief Administrative Officer Recommended for the consideration of Pickering City ouncil 27, toll Tony Prevedel, P. Eng. Chief Administrative Officer' i ATTACHMENT4I_TOREMRT#(_J- I - ' o Ministry Ministers des Municipal l Affairs Affaires municipales U1 I and Housing et du Logement Municipal Finance Policy Branch Direction des politiques relatives aux finances municipales 58 777 Bay Street, 13th Floor 777, rue Bay, 131 stage Toronto ON M5G 2E5 Toronto ON M5G 2E5 Phone: 416 585-6951 Telephone : 416 585-6951 RECEIVED Fax: 416 585-6315 Telecopieur : 416 585-6315 CITY OF PICKERING APR 2 7 2011 April 20, 2011 CORPORATE SERVM Dear Municipal Treasurer, Clerk/Treasurer: I am pleased to enclose a report showing your municipality's 2011 Annual Repayment Limit (ARL) respecting long-term debt and financial obligations. Your 2011 ARL was calculated based on 25 percent of your 2009 net own source revenues as reported in your 2009 FIR. If you require any further information, please contact the appropriate Municipal Services Office of the Ministry of Municipal Affairs and Housing (list enclosed). Yours truly, Trevor Bingler Director Enclosures r,~1 5 9 t)`~Ontario Ministry of Municipal Affairs and Housing Ministere des affaires municipales et du logement 777 rue Bay, 777 Bay Street, Toronto, Ontario M5G 2E5 Toronto (Ontario) M5G 2E5 MMAH CODE: _ 10102 FIR CLEAN FLAG: `C MUNID: 18001 MUNICIPALITY: Pickering C,,, UPPER TIER:` Durham R,-,, ;REPAYMENT LIMIT: 14,0817357 , The repayment limit has been calculated based on data contained in the 2009 Financial Information Return, as submitted to the Ministry. This limit represents the maximum amount which the municipality had available as of December 31, 2009 to commit to payments relating to debt and financial obligation. 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, 2011.. FOR,ILLUSTRATION PURPOSES ONLY, The additional long-term borrowing which a municipality could undertake over a 5-year, a 10-year, a'15-year and a 20-year period is show: - If the municipalities could borrow at 5% or 7% annually, the annual repayment limits shown above would allow it'to undertake additional long-term borrowing as follows: (a) . 20 years'@ 5% p.a. $ 175,484,833 (a) 15_years @ 5% p.a. $ 146,159,670 , (a) 10 years @ 5% p.a. $ 108,732,506 (a) . 5 years C 5% p. a. $ 60,964,907;, ' (a) 20 years @ 7% p ..a. $ 149,178,097, (a) 15 years'C~ 7% p.a. $ 128,251,789 (a) 10 years @ 7% p. 'a. $ 98,901,559` (a) 5 years @ 7% p.a., - $ 57,736,344 M.- am 71 77 771 160 +F 9 r C C Debt Charges for the Current Year + 0210 Principal (SLC 743099 01). . . : t 1,8_91,393 0220 Interest (SLC 74 3099 02). . . , . . . . . 742,139 0299 Subtotal° 2,633,532 s Ontario Clean Water Agency Provincial Projects _ 4410 Water projects -For this Municipalitykonly (SLC 74 2810 03). 0 0420 Water projects - Share of integrated project(s) (SLC 74 2820 03). . . . . ' . 0 0436 Wastewater projects - For, this Municipality only (SLC 74 2830 03). . . . 0~ . 0440 Wastewater projects - Share of integrated project(s) (SLC 74 2840 03). . . . 0 0499 0 Subtotal 0610 Payments for Long Term Commitments and Liabilities financed from the consolidated statement of operations (SLC 42 6010 01) . ( 0 0810 Debt Charges for Lease Purchase Agreements,(Tangible Capital Leases) (SLC 743140 03) Mme: 9910 y;Total, Debt Chargesa R -2 633; 532 ; Arh`punts Recovered from Unconsolidated Entities L _1010 Electricity Principal (SLC 74 3030 01) _ 1020 Electricity Interest (SLt 74.3030 02) 0 ~hY .A 1030 'Gas ".Principal (SCC 74 3040 01) . . . . . . . . . . 0 ' '1640 Gas =Interest (SLC 74 3040 02) . . . . . . . . . . . . . . . . . . . . . 1050 Telephone - Principal (SLC 74 3050 01) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1060. Telephone - Interest (SLC 74 3050 02) . . . . . . . _ 011 1099 t z Subtotal, 0 1410 Debt Charges for Tile Drainage/ Shoreline Assistance (SLC 74 3015 01 + SLC 74 3015,02) . 0 1420 : Total Debt Charges to be Excluded o 9920 , ° Net DebtiCharges , 2,633,532 Total Revenues ( Excluding Donations of Tangible Capital Assets) 1610 73 084, 158 (SLC 1.0 9910 01 SLC,53 0610 01) : . . . . . 2010 'Fees for Tile. Drainage /Shoreline Assistance (SLC 12 1850 04) . ; 0 Grants from'Gov _ ernment of Ontario, Canada and Other Municipalities; 22,10 Ontario Grants, including Grants for Tangible Capital Assets (SLC 10 0699 01 + SLC 10 0810 01 + SLC10 0815 01) ' 1,546,045 2220 Canada Grants, including Grants for Tangible Capital Assets (SLC 10 0820 01 + SLC 10 0825 01): . . 3,5342919 2230 s Revenue from other municipalities (SLC 10 1099.01) . . ' ° 129,9.~18 2240 , Gain/Loss on sale of land Et capital assets(SLC 10 181.1 01) . . . 462758 2250 Deferred revenue earned (Development Charges) (SLC 10 1812 61) . . . . . . . 966,962 i • 2299 Subtotal 6,2 24,602 2410 Fees and Revenue for Joint Local Boards for Homes for the Aged . . . ( 0. 2610, Net Revenues E 66,859,556 2620 25% of Net Revenues ! 16,714,889i' 9930 - ESTIMATED ANNUAL REPAYMENT LIMIT 14,081,35i] (25% of Net Revenues less Net Debt Charges) " SLC denotes Schedule, Line Column.