HomeMy WebLinkAboutFIN 16-22Report to Council
Report Number: FIN 16-22
Date: December 5, 2022
From: Stan Karwowski
Director, Finance & Treasurer
Subject: 2023 Temporary Borrowing By-law
- File: F-1000-001
Recommendation:
1. That the temporary borrowing limit of $63 million be established to meet 2023 current
expenditures pending receipt of taxes and other revenues for the period of January 1 to
September 30, 2023 inclusive, and $32 million thereafter until December 31, 2023;
2. That the temporary borrowing limit for capital purposes for 2023 be established at $160
million;
3. That the attached draft By-law providing for the temporary borrowing of monies be
enacted; and,
4. That the appropriate City of Pickering officials be authorized to take the necessary
actions as indicated in this report.
Executive Summary: Staff recommend that Council approve temporary 2023 borrowing
limits as set out in the above recommendations. Council approval is required to undertake
temporary borrowings, if necessary, for current operations and capital projects in order to
meet the expenses of the City for 2023, until the taxes are collected and other revenues are
received. Approval is always sought at the end of the City’s fiscal (calendar) year in order to be
prepared, in the event that loans are necessary, as we proceed into the new year. The
approval of this report and the attached By-law will provide the City with financial flexibility to
deal with unanticipated negative events. Put another way, this report provides the City with a
financial safety net.
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. The City will
undertake external borrowing from The Regional Municipality of Durham in 2023 for approved
capital expenditures. For current purposes, the $56 million limit for January 1 to September 30,
2022 has been increased to $63 million for January 1 to September 30, 2023 and the $28
million limit for October 1 to December 31, 2022 has been increased to $32 million for October
1 to December 31, 2023.
The limit for capital purposes for 2023 has been established at $160 million based on the draft
2023 Capital Budget forecast dated October 5, 2022. The actual amount to borrow may have
to be adjusted once the 2023 Capital Budget has been approved by Council.
FIN 16-22 December 5, 2022
Subject: 2023 Temporary Borrowing By-law Page 2
Discussion: The borrowing of funds for current and capital purposes may become
necessary in the normal course of operations during 2023. Under Section 407 of the Municipal
Act, 2001, as amended (the “Act”), Council 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 the Act, the Corporation may also undertake temporary borrowings
under individual project approvals, and for capital projects, pending permanent financing.
Current Budget Financing
The amount of such temporary borrowing outstanding at any one time is limited by the Act,
unless otherwise approved by the Ontario Municipal Board, to 50 percent of the estimated
annual revenues from January 1 to September 30 and to 25 percent 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 preceding year. Based upon the 2023
estimates of the Corporation, the allowable level of temporary borrowing outstanding under the
Act is estimated at $63 million from January 1 to September 30 and $32 million thereafter.
The requested $63 million should be sufficient to meet the current expenditures of the City until
the levies for 2023 are received. It is expected 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 Budget Financing
Borrowing for capital purposes under 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 staff to obtain additional
temporary interim financing (internal or external) for capital projects approved by Council. The
$160 million capital borrowing limit should provide sufficient funds to cover the estimated 2023
capital expenditures.
Attachments:
1. By-law to Authorize the Temporary Borrowing of Monies to Meet the Current and Capital
Expenditures of the City of Pickering for the Year 2023
FIN 16-22 December 5, 2022
Subject: 2023 Temporary Borrowing By-law Page 3
Prepared By: Approved/Endorsed By:
Original Signed By:Original Signed By:
Jason Bekramchand, CPA Stan Karwowski, CPA, CMA, MBA
Senior Financial Analyst – Capital & Director, Finance & Treasurer
Debt Management
Recommended for the consideration
of Pickering City Council
Original Signed By:
Marisa Carpino, M.A.
Chief Administrative Officer
Attachment #1 to Report FIN 16-22
The Corporation of the City of Pickering
By-law No.
Being a by-law to authorize the temporary borrowing
of monies to meet the current and capital
expenditures of the City of Pickering for the year
2023.
Whereas Section 407(1) of the Municipal Act, 2001, provides that the Council of the City of
Pickering may by by-law authorize the Mayor and Treasurer of the City to borrow from time to
time by way of promissory note such sums as 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 City for the year, including the amounts required for principal and interest
falling due within the year upon any debt of the City, and the sums required by law to be
provided by the Council for any local board of the City;
Whereas Section 407(2) limits the total of such borrowings to not exceed 50 percent of the
estimated annual revenues from January 1 to September 30, 2023 and 25 percent thereafter;
Whereas it is deemed necessary by the said Council to borrow the sum of $63,000,000 to
meet, until the taxes for the current year are received, the current expenditures of the City for
the year 2023, including the amounts and sums aforesaid;
Whereas the said sum of $63,000,000 plus any similar borrowings that have not been repaid,
is less than 50 percent of the total amount of the estimated revenues of the City from January
1 to September 30 as set forth in the estimates adopted by the Council for the year 2022
exclusive of revenues derivable from the sale of assets, borrowings or issues of debentures or
from a surplus including arrears of levies, and $32,000,000 is less than 25 percent of the
estimated revenues thereafter;
Whereas the Municipal Act, 2001, 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 Council to borrow the sum of $160,000,000 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 Director, Finance & Treasurer of the City of Pickering are hereby
authorized to borrow from time to time by way of promissory notes a sum or sums not
exceeding $63,000,000 to meet, until the levies for the year 2023 are received, the current
expenditures of the City for such year, including the amounts required for principal and
interest falling due within the year upon any debt of the City for the period January 1 to
September 30, 2023 inclusive and $32,000,000 thereafter until December 31, 2023.
By-law No. Page 2
2. The Mayor and Director, Finance & Treasurer of the City of Pickering are hereby
authorized to borrow from time to time by way of promissory notes a sum or sums not
exceeding $160,000,000 to meet the capital expenditures as approved by Council of the
City including the amounts required for principal and interest.
2. 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, 2001, 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, 2023.
By-law passed this 5th day of December, 2022.
_______________________________
Kevin Ashe, Mayor
______________________________
Susan Cassel, City Clerk