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, REPORT TO COUNCIL
FROMo Gillis Paterson DA1'E: Jenunry 20,1998
Director of Finance
REPORT NUMBER: TR 04/98 �
SUBJECT: 1998 Repayment Limit for Debt and Finencial Obligations
RECOI1�II4fENDATION:
ORIGIN:
That this report be fonvntded to Council for its infartnation
Each year the Ministry nf Municipal Aftairs ndvises municipalities of the Debt
Repayment Limit for Financial Obligetrons,
AUTHORITY:
Ti�c Municipal Act, R.S.O.1990, ns amended.
FINANCUIG IMPLICATIONS:
None
BACKGROUND:
RecenAy the Ministry of Municipal Affnirs provided informadon agarding the Town's 1998
: lkbt and Obligation Repayment Limit. This formuls has recently been rovised Uvough the
. ef%rts of the Provinciel Dcbt and Investment Committee which has dealt with many signi6cant
'; legislativc changes in municipni finnnce over the years, Including Rcguladons pertaining to
:' iavestments; development cherges end other financial matters. Pickering ts now a member of the
'`, ' Cominittee.
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;k �: VJhile,the ettached cornspondence may, at fust, appear somewhat daunUng, it can ba simply
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�� `{� But9M upon inf'ortnadon wntolned in thc Town's 1996 Flnenciel Information Retum (FIR),
�If �� pXe�ated in coq�uacdon with tho nnnual linenciat eteumsnts, Ministry staf'f t�evc celculated the
��a#�s �F ,�no�nt o adA�donai debt we can incui, besed upon a pi+o-deteri.;incd fortnule.
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� ' January�20,1998' '.� `' , _ + �;� :
�' ,� ;'- Report to Council # TR 04/98
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If one likeas the catciilnUons W`thut of a homeowner seeking a moAgege with a firienctal
�/ ' ius6tution, it should be clearec .Wtwt iho fomiula indicates is that, with a limit of 25%of net �
Itevenue (Operating) Fund ievonues, the total emount of ennuel rovenue ihe Town could dedicate
to additional debt (wid a�ier financial obliga6ons such av leases) repayrticiit ts 57,881,790. This
being, the case, additional debt with a term of 20 years et t 0,5% could be incucred up to n limit of
564,874,000. The same 57.8 million repays S29.5 million over 5 yuvs.
This calculation, 6owever, does not address afTordability, f.e. can the Town afford to dedicatc
this emount of money to debt repayment, with or without r�ising taxes or chenging service
' levels. It is s calculadon to simply provide a"rough nde of thumb."
Since the Town cumntly hes no direct debt the point is moot. The oniy debt outstanding wes
issued on bclialf of Pickering Hydro. The bslence outstanding at December 31, 1997 is
53,051,500 end the 1998 debt churges will be 51,029,966. This linbility is called self-sust¢ining
or indirect as it is paid by the u61ity.
Should Council declde, however, to issue debt ut any time, ar enter into lenses, other fixed
repnyments or long term finenciul obligauons, it does provide U�e anm�ni rcpaymenl limit (S7,8
miltion) within which ihe Town can so do without fwther Provincinl upprovel. Within this limit,
,the Finance.Department ccrtifics the amowls and.approprinteness of any finencing to be
considered by Council. Council retains the ultimetc uuthority in approving any such finencing.
The forcgoing is providcd for your information. A subuquent report will be issued when the
calculation is rcviscd to tnke into wnsidcration changes in educadon funding,
ATTACHhTENTS: •
1. I,etter from the Minisiry of Municipal Affeirs dated December 19,1997.
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G�II!s A. Paterson
(3AP/md
Att:
�PY: � acneral Menager :
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-r'°' � Muntalp�) Aff�in AHdnf munlolpdu
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' RECEiVED M�a�c���er,�
� ' �• TpNM OF PICKERINO 13th Floor, 777 Bty Strac'
s , - ' Toronto ON MSG2E5
�E� Q 9 199i ' Td: (416) 585-6941
� � � `' • Fex: (416) 585-6315
,�� r � ,. QLERRSDEPARTMENT
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December 19, 1997 .,•� y 199� �' ,
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Dear Municipal Treas�, CCvk/�'i �bas�Murcr:
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I am piwed to enclaso e report showing your municipnliry'a 1998 annun! rcpayment limit
: respecting long•tertn debt and tinnenaal obligadaro.
The method used for calculating your municipality's 1998 debt end &nancial obligetion limit is
besed on the principle that annud paymmts rdating to debt and 6nanciat obligations of a
municipdity nhould not be moro than 25 per cent of own hura revrnue fund revrnuea.
As a result af the proposed changu resuldng &om education finana refortn, the ministry is
proposing to take into aceount the additional own source rwenuo thet each municipality may bo
afforded. However, given that the informadon needed to recalculete the «paymmt limits in this
manner wts nat available when the limits werc calwlated, thc ministry ia proposing to issue the
annuai repayment limiu in two phasa.
The firat phase is based on the curtent method for calculating the repayment limit and is included
for your municipality in erda to provide you with the infomution needed to proceed with
immedieta 1998 busines�. The second phase would occur early in the new year, at which time the
ministry wouid issue on updated repayment limit that would include m adjustmrnt for potential
changw to municipal own source revemia that may resuit from education finence refortn.
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if you require any tirtha infortnatioq please contact the appropriate Regional Operations Branch
of6ce of the M'utinry of Muniripal Affain and Housing (list enclosed).
Youro tmly,
-�.�._
Nancy Budxki
Director
Enclosures . . . '
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7aionra Ontcrlo Taonro (Onrarlo) . >
MJG1E! ` _ MIQJEJ
, ANNUAL REPAYMENT LIMIT
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UNDER ONT.4RI0 REGULATION 799/94
�� MMACODE: 10403 I
II MUNID: 18001 I
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� MIINIC�AI.17'Y: PlekerfaQT
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I . UPPERTIER: Durh�m R ,
REPAYMENT LA�tIT: 59,881,790
The rcpayment 1(mit has been calculeted batied on dnte conWned in �he 1996 Finencial Infortnetion Retum,
subm(tteJ to the Ministry. This limit rcprcsenu the maximum emount which the municipaliry had available as
at December 31,1996 to commit to peymenct rcluing to debt end �nancial obligation�. Priar to the
authodradon by eoundl of a long term debt or finenciai obligadon, thfs Iimit must be adjusud by the trcaswer
in the prescdbed manner, The limlt ts effative lanuery 01,1998.
FOR ILLUSTRATION PURPOS£S ONLY,
the additionel longderm borrowing which a mun(cipaliry could underteke over a 5- year, a 10 • year, a IS •
year end a 20 • year pe�iod is shown.
. � � �a OIof07 � DuePno�rcd: IS-Dee-97 � �
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�DETERMINATION OF ANNUAL DEBT REPAYMENT Ln4i[T
' ii h1UNICIPALI'TY: Pklurlo�T" MMAHCODE: IW03 y
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�.o cnossoeercw►aa�s
i.� e�+�a� e�i:�eoi aro.ass
ia i�wnc r�i:leoz ��.z�i
IJ SUBTOTAL AddLina�.1.1.2 1.73�.676
2.0 DEBTCHAR6ES ON O.C.W.A. PROVINCIAL PROIECT •
21 WuaProJects—Nbmwicipaliryonly PL12/607 . 0
23 Wua ProJcw — shw of InteQnted Prolect(�) PL I3 �7 OS 0
27 SewaRoJav—�hbmwicipd(tyonly PL124803 0
24 SewerPmJcw—shueoflnteQntedpmJect(�) PL12/903 0
23 SllBTOTAL Add L(na il �tw i! I 0�
PAYMEM' M RESPECT OF LON6 iERM
�,p COMMfIMENISANDLIABILITIES
� 1A�� � 9UBT0'fAL•DEBTCNARGES
J.0 DEBT CHAROfS FOR MUNICIPAL UTILRIfS
. . 3.1 Elutriciry
3.2 Ou
3.7 Tclrylane
Amowq Raoraed fmm Unconsolidued Emitia
5.4 Hydro(Prfncipd)
S.S Hydro (Inurat)
3.6 OuuidTclryAone(Princip�)
i,7 OutndTeleplwneQntemtl
S.! SUBTOTAL
b.0 ppy!,��70PROVMCEFORWWNTOWN
REVRALIUTION PROGRAM LOANS
PL OA T) 08 0
Add Uea 1�,2.1,),0 t ,576
PL OA /B 02 0
PL 0! /9 02 0
PL OA SO 62 0
PL 12 Sf 01 870.100
PL 12 SS 02 AN.I74
PL I7 S7 OI 0
PL I2 ST 02 0
Add Lina S.I ilw S.7 �
PL OB 6106 0
��� DEBTCFIAROESFORTILEDRARJAGEAND
' SHORELQJEASSISTANCE PL OS 4S 02 i02
!.0
SUBTOTAL•DEBTCFIARGESTOBEEXCI.UDED AddLloa3.S,6A,7.0 I,7J1,676
9A ' :: . NETDLBTCHARGES �;
. _ � '. P�ae:O2ot03 DitePrc�redi IS�Dee•97
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� � � DETERMINATION OF ANMIAL DEBT REPAYMENT LIMTf '
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:;.nivNics�.rrv: e����oer ns�cone: io+o�
IOA TOTAL REVENUE FllND REVENUES PL OI S 101 76,793J86
` 11.0 ' �� fOR REPAYMO THE PROVMCE FOR
D0IYNTOWN REVITALIZATION LOANS PL 06 6103 p
��•� FEESFORTILEORAINAGEANDSHORELRJE
ASSISTANCE , PL O7 �S 01 IO2
U,0 GRAMSFROMGOVERNMENTOFONTARIO, GOVEtWMENTOFCANADAAND
OTHER MUNICIPALI IIES
13.1 Onur(o 6mu PL O7 69 W 2,567.02)
13.2 Cuud� Oruro PL 03 )0 04 13,474.
- U.) O�herMunidpdiUa PL03JI01 587,912
13.1 SUBTOTAL Add Lina I�.t Nw tta 7.162,409 •
I I.0 REVENUE FROM SALE OF LAND PL OJ /9 Ot 0
IS.O COMRIBUiIONSFROMCMRALFUND
16.0 CONTRIBUTIONS FROM RESERVES AND RESERVE
FUNDS
�7,0 NET RLVENUE FUND itEVENUES
1l.0 3S',S OF NLT REVENUE FUND REVENUE
19A ANNUALREPAYM[NI'WMIT
IS% atNN Rwrau� F��A Rwesea kn NN D�Dt C4�r{a
PL W /3 04 17a,766
PL OJ 14 04 1,429,050
upf ��> �tl! u0tl ����2�
IJ.I,t�,13,16 ]I 27,159
7,A81.790
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. � T,881,790!j
FOR (LWSfRAT10NlURPOSL90NLY
Itt6o mwkfpdiry wuW bamw u IO.SX mau+llr, tha �onu�l rep�ymrnt itm(t showo In
i9 �bow would �low it w undendce dditlmd Im{aam barowiaj u folloxn:
� � �.> zoy�s�iosxp,. c��674,294
(�) ISyars�I03lGp.a Sd,276,571
� (�) IOyears� 10.3%p.a 47.107,174
(�) OS yan � I D.SY. p.�. 29.300A22 '
.. . � Piar. 07ot03 D�t�Pnpurd: IS-Dee-97 � .
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MIMSTRY,OFMUNICIPAL;9FFAlRSAND iiOUSING
sourawFS�arr: . ' s�c
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12/97
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