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Home My WebLink AboutCS 12-03 REPORT TO FINANCE & OPERATIONS COMMITTEE Report Number: CS 12-03 Date: February 3, 2003 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2003 Annual Repayment Limit for Debt and Financial Obligation Recommendation: 1. That this report be forwarded to Council for information. Executive Summary: Not applicable Financial Implications: Not applicable Background: Recently, the Ministry of Municipal Affairs provided information regarding the City's 2003 Debt and Obligation Repayment Limit. Debt for these purposes includes all forms of loans, leases and other long term financial obligations and commitments. The 2003 Annual Repayment Limit ( ARL) was calculated based on 25 percent of 2001 net own-source revenues as reported in City of Pickering's 2001 Financial Information Report (FIR) submitted to the Ministry of Municipal Affairs. 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 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 ARL for 2003 is $11,246,607 and represents the maximum principal and interest payment for the year that could be undertaken without Ontario Municipal Board approval. This calculation does not measure affordability or take into account other commitments the City may have and 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, 2001 to commit to payments relating to debt and financial obligations. The limit is effective January 1, 2003. Report CS 12-03 Date: February 3, 2003 Subject: 2003 Annual Repayment Limit for Debt and Financial Obligation Page 2 This limit takes into consideration the $8.7 million of internal loans and financial commitments outstanding at December 31, 2001 and the related annual repayment amount of approximately $1.2 million. During the year of 2002, we undertook both internal loans and external debt. The value of the additional internal loans from reserve funds is $1,224,000 and the new external debt through the Region of Durham is $4,278,000. As of year-end December 31, 2002, the total of the approved and committed loans, debt, leases and other long term obligation are valued at $14,241,623. The related principal and interest charges or annual repayment in 2003 for the committed debt and long term obligation is $1,731,872 which is included in the 2003 Current Budget. After taking into account this committed annual charge, the ARL is reduced to $9,514,735 for the 2003 calendar year. For illustration purposes, if the City could borrow at 7%, the ARL of $9,514,735 would allow it to undertake additional long term borrowing as follows: Terms a) 5 years b)10 years c) 15 years d) 20 years Debt Amount ($j 39,012,292 66,827,517 86,659,388 100,799,238 Attachments: 1. Letter from the Ministry of Municipal Affairs dated January 6, 2003 Prepared By: Approved I Endorsed By: X Senior Financial Analyst - -- .?-/¿~-- -- Gillis A. Paterson Director, Corporate Services & Treasurer GAP:vw Attachment Copy: Chief Administrative Officer Recommended for the consideration of Pickering City Council J ATTACHMENT#..L TO REPORT # Cs J.;2 -03 Ministry of Municipal Affairs and Housing Ministère des 'Affaires municipales et du logement @ Ontario Municipal Finance Branch 13th Floor, 777 Bay Street, Toronto, ON. M5G 2E5 Tel: (416) 585-6951 Fax: (416) 585-6315 January 6, 20Ø3 Dear Municipal Treasurer, Clerk/Treasurer: I am pleased to enclose a report showing your municipality's 2003 Annual Repayment Limit (ARL) respecting long-tenn debt and financial obligations. Your 2003 ARL was calculated based on25 percent of your 2001 net own source revenues as reported in your 200 1 FIR. Note that revenues formunicipal electrical utilities are not included in the calculation of the ARL, in accordance with Public Sector Accounting Board (PSAB) guidelines. 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, ¡jþ#V t~ Dan Cowin Director Enclosures Ministry of Municipal Affairs and Housing 777 Bay Street, Toronto, Ontario. M5G 2E5 Ministère des affaires municipales et du logement 777 rue Bay Toronto (Ontario) M5G 2E5 ANNUAL REPAYMENT LIMIT (UNDER ONTARIO REGULATION 403/02) The repayment limit has been calculated based on data contained in the 2001 Financial'Information Return, as submitted to the Ministry. This limit represents the maximum amount which the municipality had available as of December 31,2001 to commit to payments relating to debt and financial obligations. 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 01,2003. 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 shown. Pa~e: 01 of 03 Date Prepared: January 3, 2003 DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT 1.0 GROSS DEBT CHARGES 1.1 .. Principal 1.2 Interest 2.0 3.0 SLC 74 3099 01 SLC 74 3099 02 1,203,837 506,892 1,710,7291 1.3 SUBTOTAL Add Lines 1.1, 1.2 DEBT CHARGES ON O.C.W.A. PROVINCIAL PROJECT 2.1 2.2 2.3 2.4 Water Projects -- this municipality only Water Projects -- share of integrated project(s) Sewer Projects -- this municipa1ity only Sewer Projects -- share of integrated project(s) SLC 74 2810 03 SLC 74 2820 03 SLC 74 2830 03 SLC 74 2840 03 0 0 0 0 2.5 SUBTOTAL Add Lines 2.1 thru 2.4 01 PAYMENT IN RESPECT OF LONG TERM COMMITMENTS AND LIABILITIES . SLC 42601001 0 5.0 DEBT CHARGES FOR MUNICIPAL UTILITIES 5.1 5.2 5.3 5.4 5.5 5.6 5.7 ',", Electricity Gas Telephone SLC 40 3099 02 + SLC 40 3099 08 SLC 40 3299 02 + SLC 40 3299 08 SLC 40 3499 02 + SLC 40 3499 08 0 0 0 Amounts Recovered from Unconsolidated Entities Electricity (Principal) Electricity (Interest) Gas and Telephone (Principal) Gas and Telephone (Interest) SLC 74 3030 01 SLC 74 3030 02 SLC 74 3040 01 + SLC 74 3050 01 SLC 74 3040 02 + SLC 74 3050 02 599,000 59,539 0 0 6.0 5.8 SUBTOTAL Add Lines 5.1 thru 5.7 7.0 658,5391 PAYMENTS TO PROVINCE FOR DOWNTOWN REVITALIZATION PROGRAM LOANS SLC 42 5410 01 0 DEBT CHARGES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 40 1850 02 + SLC 40 1850 08 0 , > Page: 02 of 03 January 3, 2003 Date Prepared: " '. DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT 10,0 TOTAL REVENUE FUND REVENUES* SLC 10991001 49,446,699 11.0 FEES FOR REPAYING THE PROVINCE FOR DOWNTOWN REVITALIZATION LOANS SLC 425410 01 0 12.0 FEES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 12 185004 0 13.0 GRANTS FROM GOVERNMENT OF ONT ARlO, GOVERNMENT OF CANADA AND OTHER MUNICIPALITIES 13.1 Ontario Grants SLC 10 0699 01 + SLC 10081001 180,242 13.2 Canada Grants SLC 10 0820 01 16,725 13.3 Other Municipalities SLC 10 109901 54,543 13.4 SUBTOTAL Add Lines 13.1 thru 13.3 251,5101 14.0 FEES AND REVENUES FOR JOINT LOCAL BOARDS FOR HOMES FOR THE AGED 0 15.0 NET REVENUE FUND REVENUES Lines 10 less Lines 11,12,13.4,14 16.0 25% OF NET REVENUE FUND REVENUE -- SLC denotes Schedule, Line, Column * Total Revenue Fund Revenues have been adjusted to reflect the removal of the sale of hydro utilities. Page: 03 of 03 Date Prepared: January 3, 2003