HomeMy WebLinkAboutFIN 10-18DICKERING
Report to
Executive Committee
Report Number: FIN 10-18
Date: May 7, 2018
From: Stan Karwowski
Director, Finance & Treasurer
Subject: 2018 Refinancing Debentures
Recommendation:
1. That Report FIN 10-18 of the Director, Finance & Treasurer regarding the 2018
refinancing debentures be approved;
2. That the Director, Finance & Treasurer be authorized to transfer $582,000 from the
Rate Stabilization Reserve to fund the outstanding principal for the debt issued for
the Fire Services Division Headquarters project;
3. That the draft by-laws attached to this report be enacted;
4. That the Director, Finance & Treasurer be authorized to make any changes,
adjustments, and revisions to amounts, terms, conditions, and take any actions
necessary in order to effect the foregoing; and
5. That the appropriate City of Pickering ("City") officials be authorized to take the
necessary actions as indicated in this report.
Executive Summary: The forthcoming 2008 debentures issue coming due on
November 21, 2018 will be financed by a combination of $1,463,000 in refinancing
debentures, and $582,000 in full payment of one debenture. Refinancing debenture by-
laws are needed to be in-place in order to refinance the outstanding debentures
payment on or before the final maturity date.
Financial Implications: The refinancing debenture by-laws are needed to be in-
place prior to November 21, 2018 in order for the Regional Municipality of Durham
("Region") to refinance the outstanding debentures issue, without which the City will
have to resort to current funds to repay the outstanding principal amount in full.
FIN 10-18
May 7, 2018
Subject: 2018 Refinancing Debentures Page 2
Discussion: When the Region undertook debentures financing on behalf of the City
in 2008, 15 and 20 -year debentures were unavailable, and the prevailing interest rates
were attractive for the 5 to 10 -year term debentures. As a result, projects requiring 15
and 20 -year debentures financing were undertaken at a 10 -year term, with the intention
of refinancing these debentures when they become due in November 2018. Council
approval is being sought at this time in order to have the debenture by-laws in place
prior to the debentures maturity date of November 21, 2018.
A summary of projects with outstanding principal payment on November 21, 2018 is as
follows:
Project Description
Original
Term of
Years
Original
Principal
Amount
Refinancing
Term of
Years
Refinancing
Principal
Amount
Don Beer Arena - Ice Rink 2
Renovations
15
$630,000
5
$263,000
Pickering Recreation
Complex Doubles Squash
Court and Aerobics Studio
15
2,000,000
5
833,000
Sheppard Avenue,
Reinforced Soil System
15
880,000
5
367,000
Total Refinancing
Debentures
$3,510,000
$1,463,000
Addition to Fire Services
Division Headquarters — To
be fully paid
20
930,000
None
582,000
Total Outstanding 2008
Debentures Issue
$4,440,000
$2,045,000
Debentures Related to Addition to Fire Services Division Headquarters Project
The refinancing term is based on the principle that the debt term cannot exceed the life
of the asset. The City takes a conservative approach when estimating the life of the
asset to ensure that the debt term is always less. Fire Hall Station #5 was originally
constructed in 1969 (49 years old) with the headquarters addition built in 2007. A
10 -year debenture for the Addition to Fire Services Division Headquarters project was
issued in 2008 in the amount of $930,000 with the principal amount outstanding now
being $582,000. The original fire hall building has some structural challenges and
therefore, the City may consider rebuilding the entire fire hall based upon further
examination of the various structural issues. With an uncertain building future, the best
financial plan is to pay-off the debt to provide the City the option of either replacing the
F$N 10-18 May 7, 2018
Subject: 2018 Refinancing Debentures Page 3
building or undertaking extensive repairs. Recommendation 2 funds the outstanding
principal payment from a transfer from the Rate Stabilization Reserve and saves an
estimated $126,000 in interest costs.
With the full payment of the outstanding debt for the Addition to Fire Services Division
Headquarters project, the required refinancing debentures will be reduced to
$1,463,000.
Attached to this report are the three draft refinancing debentures by-laws reflecting the
total refinancing amount of $1,463,000, and the balance of $582,000 will be forwarded
to the Region for the forthcoming 2008 debentures issue corning due on November 21,
2018.
Attachments:
1. Being a by-law to confirm the authorization of the issuance of refinancing debentures
in the amount of $263,000 for the Don Beer Arena - Ice Rink 2 Renovations project in
the City of Pickering
2. Being a by-law to confirm the authorization of the issuance of refinancing debentures
in the amount of $833,000 for the Pickering Recreation Complex Doubles Squash
Court and Aerobics Studio project in the City of Pickering
3. Being a by-law to confirm the authorization of the issuance of refinancing debentures
in the amount of $367,000 for the Sheppard Avenue, Reinforced Soil System project
in the City of Pickering
Prepared By: Approved/Endorsed By:
Caryn Kong, CPA, CGA
Senior Financial Analyst — Capital &
Debt Management
Stan Karvvowski, CPA, CMA, BA
Director, Finance & Treasurer
Recommended for the consideration
of Pickering City Council
Tony Prevedet, P. Eng.
Chief Administrative Officer
Zola
ATTACHMENT It _ .' cEP OR( rlt‘t(�
The Corporation of the City of Pickering
By-law No. /18
Being a by-law to confirm the authorization of the issuance of
refinancing debentures in the amount of $263,000 for the Don Beer
Arena -Ice Rink 2 Renovations project in the City of Pickering
Whereas Section 11 of the Municipal Act, 2001, as amended, provides that a lower -tier
municipality may pass by-laws respecting matters within the spheres of jurisdiction
described in that Section;
Whereas Subsection 401(1) of the Municipal Act, 2001, as amended, provides that a
municipality may incur a debt for municipal purposes, whether by borrowing money or in
any other way;
Whereas Subsection 401(3) of the Municipal Act, 2001, as amended, provides that a
lower -tier municipality in a regional municipality does not have the power to issue
debentures;
Whereas The Regional Municipality of Durham has the sole authority to issue
debentures for the purposes of its lower -tier municipalities including The Corporation of
the City of Pickering (the "City");
Whereas the Council of the City approved Report OES 10-08 at its meeting of April 21,
2008 in pursuant to Resolution 82/08 and has awarded Tender T-1-2008 for the Don
Beer Arena -Ice Rink 2 Renovations project;
Whereas the construction of the Don Beer Arena -Ice Rink 2 Renovations project has
been completed;
Whereas City of Pickering By-law 6866/08 authorized the issuance of debentures in the
amount of $630,000 for the Don Beer Arena -Ice Rink 2 Renovations project for a period
not exceeding 15 years;
Whereas the Regional Municipality of Durham By-law 63-2008 authorized the issue of
ten-year installment debentures issue, of which $263,000 may be raised by the issue of
refinancing debentures in the final year of maturity (2018); and
Whereas before the Council of the City authorize the issuance of refinancing
debentures for the Don Beer Arena -Ice Rink 2 Renovations project, the Council of the
City had the Treasurer update the City's Annual Repayment Limit, the Treasurer
calculated the estimated annual amount payable in respect of such project and
determined that such annual amount would not cause the City to exceed the updated
limit and, therefore, Ontario Municipal Board approval was not required prior to City
By-law No. /18 Page 2
Council's authorization as per Section 401 of the Municipal Act, 2001, as amended, and
the regulations made thereunder;
Now therefore the Council of The Corporation of the City of Pickering hereby enacts as
follows:
1. That the City proceed with the refinancing debentures in the amount of $263,000 for
the Don Beer Arena -Ice Rink 2 Renovations project;
2. That the sum of $263,000 be financed by the issue of debentures by The Regional
Municipality of Durham over a period not to exceed five years; and
3. That the funds to repay the principal and interest of the debentures be provided for
in the annual Current Budget for the City commencing in 2018 and continuing
thereafter until the debenture financing is repaid.
By-law passed this 14th day of May, 2018.
David Ryan, Mayor
Debbie Shields, City Clerk
The Corporation of the City of Pickering
By-law No. /18
Being a by-law to confirm the authorization of the
issuance of refinancing debentures in the amount of
$833,000 for the Pickering Recreation Complex
Doubles Squash Court and Aerobics Studio project
in the City of Pickering
Whereas Section 11 of the Municipal Act, 2001, as amended, provides that a lower -tier
municipality may pass by-laws respecting matters within the spheres of jurisdiction
described in that Section;
Whereas Subsection 401(1) of the Municipal Act, 2001, as amended, provides that a
municipality may incur a debt for municipal purposes, whether by borrowing money or in
any other way;
Whereas Subsection 401(3) of the Municipal Act, 2001, as amended, provides that a
lower -tier municipality in a regional municipality does not have the power to issue
debentures;
Whereas The Regional Municipality of Durham has the sole authority to issue
debentures for the purposes of its lower -tier municipalities including The Corporation of
the City of Pickering (the "City");
Whereas the Council of the City approved Report OES 24-08 at its meeting of July 17,
2008 in pursuant to Resolution 15/08 and has awarded Tender T-2-2008 for the
Pickering Recreation Complex Doubles Squash Court and Aerobics Studio project;
Whereas the construction of the Pickering Recreation Complex Doubles Squash Court
and Aerobics Studio project has been completed;
Whereas City of Pickering By-law 6884/08 authorized the issuance of debentures in the
amount of $2,000,000 for the Pickering Recreation Complex Doubles Squash Court and
Aerobics Studio project for a period not exceeding 15 years;
Whereas the Regional Municipality of Durham By-law 63-2008 authorized the issue of
ten-year installment debentures issue, of which $833,000 may be raised by the issue of
refinancing debentures in the final year of maturity (2018); and
Whereas before the Council of the City authorize the issuance of refinancing
debentures for the Pickering Recreation Complex Doubles Squash Court and Aerobics
Studio project, the Council of the City had the Treasurer update the City's Annual
Repayment Limit, the Treasurer calculated the estimated annual amount payable in
respect of such project and determined that such annual amount would not cause the
By-law No. /18 Page 2
City to exceed the updated limit and, therefore, Ontario Municipal Board approval was
not required prior to City Council's authorization as per Section 401 of the Municipal Act,
2001, as amended, and the regulations made thereunder;
Now therefore the Council of The Corporation of the City of Pickering hereby enacts as
follows:
1. That the City proceed with the refinancing debentures in the amount of $833,000 for
the Pickering Recreation Complex Doubles Squash Court and Aerobics Studio
project;
2. That the sum of $833,000 be financed by the issue of debentures by The Regional
Municipality of Durham over a period not to exceed five years; and
3. That the funds to repay the principal and interest of the debentures be provided for
in the annual Current Budget for the City commencing in 2018 and continuing
thereafter until the debenture financing is repaid.
By-law passed this 14th day of May, 2018.
David Ryan, Mayor
Debbie Shields, City Clerk
ATTACHMENT
The Corporation of the City of Pickering
By-law No. /18
TO R
ORT# Yln�
Being a by-law to confirm the authorization of the issuance of
refinancing debentures in the amount of $367,000 for the Sheppard
Ave, Reinforced Soil System project in the City of Pickering
Whereas Section 11 of the Municipal Act, 2001, as amended, provides that a lower -tier
municipality may pass by-laws respecting matters within the spheres of jurisdiction
described in that Section;
Whereas Subsection 401(1) of the Municipal Act, 2001, as amended, provides that a
municipality may incur a debt for municipal purposes, whether by borrowing money or in
any other way;
Whereas Subsection 401(3) of the Municipal Act, 2001, as amended, provides that a
lower -tier municipality in a regional municipality does not have the power to issue
debentures;
Whereas The Regional Municipality of Durham has the sole authority to issue
debentures for the purposes of its lower -tier municipalities including The Corporation of
the City of Pickering (the "City");
Whereas the Council of the City approved Report OES 36-07 at its meeting of
September 17, 2007 in pursuant to Resolution 179/07 and has awarded Tender T-2-
2007 for the Sheppard Ave, Reinforced Soil System project;
Whereas the construction of the Sheppard Ave, Reinforced Soil System project has
been completed;
Whereas City of Pickering By -Law 6808/07 authorized the issuance of debentures in the
amount of $880,000 for the Sheppard Ave, Reinforced Soil System project for a period
not exceeding 15 years;
Whereas the Regional Municipality of Durham By -Law 63-2008 authorized the issue of
ten-year installment debentures issue, of which $367,000 may be raised by the issue of
refinancing debentures in the final year of maturity (2018); and
Whereas before the Council of the City authorize the issuance of refinancing
debentures for the Sheppard Ave, Reinforced Soil System project, the Council of the
City had the Treasurer update the City's Annual Repayment Limit, the Treasurer
calculated the estimated annual amount payable in respect of such project and
determined that such annual amount would not cause the City to exceed the updated
limit and, therefore, Ontario Municipal Board approval was not required prior to City
By-law No. /18 Page 2
Council's authorization as per Section 401 of the Municipal Act, 2001, as amended, and
the regulations made thereunder;
Now therefore the Council of The Corporation of the City of Pickering hereby enacts as
follows:
1. That the City proceed with the refinancing debentures in the amount of $367,000 for
the Sheppard Ave, Reinforced Soil System project;
2. That the sum of $367,000 be financed by the issue of debentures by The Regional
Municipality of Durham over a period not to exceed five years; and
3. That the funds to repay the principal and interest of the debentures be provided for
in the annual Current Budget for the City commencing in 2018 and continuing
thereafter until the debenture financing is repaid.
By-law passed this 14th day of May, 2018.
David Ryan, Mayor
Debbie Shields, City Clerk