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REPORT TO THE
FINANCE & OPERATIONS COMMITTEE
Report Number: CS 30-02
Date: November 1, 2002
From:
Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject:
2003 Temporary Borrowing By-Law
Recommendation:
1. It is recommended that Report CS 30-02 of the Director, Corporate Services &
Treasurer be received;
2. The temporary borrowing limit to meet 2003 current expenditures pending receipt of
taxes and other revenues be established at $23,000,000 for the period January 1,
2003 to September 30, 2003 inclusive, and $11,000,000 thereafter until December
31,2003; .
3. The temporary borrowing limit for capital purposes for 2003 be established at
$16,000,000;
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.
Executive Summary:
Not applicable
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 2003 Current Budget. With internal
borrowings being undertaken to the maximum advisable, we have resorted to external
borrowing from the Region in 2002. For Current purposes, the $21 million limit for
2002 has been increased to $23 million for 2003 and the $10 million has been
increased to $11 million. The limit for Capital purposes has been increased from $12
million for 2002 to $16 million for 2003. This may have to be adjusted once 2003
Capital budget has been approved.
Report CS 30-02
180 Subject: 2003 Temporary Borrowing By-Law
Date: November 1, 2002
Page 2
Background: The borrowing of funds for current and capital purposes may
become necessary during the normal course of operations during 2003. Under the
provisions of Section 187 of the Municipal Act, RS.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 Budqet Financinq:
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 2002 estimates of the Corporation, the allowable level of temporary borrowing
outstanding under legislation is estimated at $23,000,000 from January 1 to September
30 and $11,000,000 thereafter.
The requested $23,000,000 should be sufficient to meet the current expenditures of the
City until the levies for 2003 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.
Capital Budqet Financinq:
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 3 provides the
authority for the Treasurer to obtain additional temporary interim financing (internal or
external) for capital projects approved by Council. The $16 million capital borrowing
limit would provide sufficient funds to cover the estimated 2003 capital expenditures.
Attachments:
1.
2003 Temporary Borrowing By-Law
Report CS 30-02
Date: November 1, 2002 181
Page 3
Subject: 2003 Temporary Borrowing By-Law
Prepared By:
Approved / Endorsed By:
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Caryn KÕng
Senior Financial Analyst
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Gillis A. Paterson
Director, Corporate Services & Treasurer
Attachments
Copy: Chief Administrative Officer
Recommended for the consideration of
Pickering City Council
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ATTACHMENT#-L- TOREPORT#li. ~o -o~
18?
THE CORPORATION OF THE CITY OF PICKERING
BY-LAW NO.
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 2003.
WHEREAS Section .187 of the Municipal Act provides that the Council of thè 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, 2003 to September 30, 2003
and 25 per cent thereafter; and,
WHEREAS it is deemed necessary by the said Council to borrow the sum of twenty-
three million dollars ($23,000,000) to meet, until the taxes for the current year are
received, the current expenditures of the Municipality for the year 2003, including the
amounts and sums aforesaid; and,
WHEREAS the said sum of twenty-three million dollars ($23,000,000) 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 2002 exclusive of revenues
derivable from the sale of assets, borrowings or issues of debentures or from a surplus
including arrears of levies and $11,000,000 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 sixteen
million dollars ($16,000,000) to meet the capital expenditures approved by CounciL
NOW THEREFORE THE COUNCil 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-three million dollars ($23,000,000) to meet, until the
levies for the year 2003 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, 2003
to September 30, 2003 inclusive and $11,000,000 thereafter until December 31,
2003.
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 in all the sum of sixteen million dollars ($16,000,000) to meet the capital
expenditures as approved by Council, of the Municipality including the amounts
required for principal and interest.
183
2. Any promissory nòtes 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.
3. This By-Law shall come into effect on the first day of January 2003.
BY-LAW read a first, second and third time and finally passed this
Wayne Arthurs, Mayor
Bruce Taylor, Clerk