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Home My WebLink AboutCS 34-04PICKERING REPORT TO EXECUTIVE COMMITTEE Report Number: CS 34-04 Date: September 27, 2004 From; Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2004 Annual Repayment Limit for Debt and Financial Obligations Recommendation: That this report be forwarded to Council for information. Executive Summary: Not applicable Financial Implications: Not applicable Background: Recently, the Ministry of Municipal Affairs and Housing (MMAH) provided information regarding the City's 2004 Debt and Obligation Repayment Limit. Debt for these purposes includes all forms of loans, leases and other long term financial obligations and commitments. The 2004 Annual Repayment Limit (ARL) was calculated based on 25 percent of 2002 net own-source revenues as reported in City of Pickering's 2002 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 calculated 2004 ARL based on 25% of net revenue fund is $12,375,531 based upon the 2002 Financial Information Return. However, after taking into account debt and debt charges reported to MMAH as at December 31, 2002, this limit is reduced to $11,309,264. Furthermore, taking into account existing financial obligations, additional debt and internal loans and other financial obligations issued in 2003, this limit is further reduced to $9,963,160 for the 2004 calendar year. As of December 31, 2003, the related annual principal and interest charges, and other financial obligations as recorded in the City's books are $2,412,371. Report CS 34-04 Subject: 2004 Annual Repayment Limit for Debt and Financial Obligation Date: September 27, 2004 Page 2 The net additional ARL of $9,963,160 for 2004, as adjusted, represents the maximum additional principal and interest payment for the year that could be undertaken without Ontario Municipal Board approval. This calculation does not measure affordability nor 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, 2002 to commit to payments relating to debt and financial obligations. The limit is effective January 1, 2004. For illustration purposes, if the City could borrow at 7%, the net ARL of $9,963,160 would allow it to undertake additional long term borrowing as follows: Terms a) 5 years b) 10 years c) 15 years d) 20 years Debt Amount ($) 40,850,923 69,977,O66 90,743,604 105,549,859 Attachments: 1. Letter from the Ministry of Municipal Affairs and Housing dated July 12, 2004 Prepared By: Caryn Kong Senior Financial Analyst Approved / Endorsed By: Gillis A. Paterson Director, Corporate Services & Treasurer GAP:ck Attachment Copy: Chief Administrative Officer Recommended_for the co~ of Picker~// _T, homas J~ieDAdministrative Officer Ministry of Municipal Affairs and Housing Municipal Finance Branch 777 Bay Street, 13th Floor Toronto ON M5G 2E5 Phone: (416) 585-6951 Fax: (416) 585-6315 July 12, 2004 Ontario ~' MENT #-L..-TO REPORJ"# d~'~co~ Minisffire des .... t..~- *,",c~<~ Affaires municipales JUL ? 6 2004 et du Logement 777, Rue Bay, 13~ ~tage T~l~phone: (416) 585-6951 l~l~copieur: (416) 585-631~ ~m'-,e ~,~,~o~m~. CiTY OF PICKERING I~tCKERtNG, ONTARIO Dear Municipal Treasurer, Cleric/Treasurer: I am pleased to enclose a report showing your municipality's 2004 Annual Repayment Limit (ARL) respecting long-term debt and financial obligations. Your 2004 ARL was calculated based on 25 percent of your 2002 net own source revenues as reported in your 2002 FIR. Note that revenues for municipal 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, Director Enclosures 1322(06/95) Ministry of Municipal Affairs and Housing 777 Bay Street, Toronto, Ontario. M5G 2E5 Minist~re 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 2002 Financial Information Return, as submitted to the Ministry. This limit represents the maXimum amount which the municipality had available as of December 31, 2002 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, 2004. 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. Page: 01 of 03 Date Prepared: June 8, 2004 DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT 1.0 GROSS DEBT CHARGES 1.1 Principal SLC 74 3099 01 952,089 1.2 Interest SLC 74 3099 02 457,348 1.3 SUBTOTAL 2.0 DEBT CHARGES ON O.C.W.A. PROVINCIAL PROJECT Add Lines 1.1, 1.2 [ 1,409,437] 2.1 Water Projects -- this municipality only SLC 74 2810 03 0 2.2 Water Projects -- sham of integrated project(s) SLC 74 2820 03 0 2.3 Sewer Projects -- this municipality only SLC 74 2830 03 0 2.4 Sewer Projects -- share of integrated project(s) SLC 74 2840 03 0 2.5 SUBTOTAL Add Lines 2.1 thru 2.4 [ 0] 3.0 PAYMENT IN RESPECT OF LONG TERM COMMITMENTS AND LIABILITIES DEBT CHARGEs FOR LEASE PURCHASE AGREEMENTS 4.0 SLC 42 6010 01 0 SLC 74 3140 03 0 6.0 DEBT CHARGES FOR MUNICIPAL UTILITIES 6.1 Electricity SLC 40 3099 02 + SLC 40 3099 08 0 6.2 Gas SLC 40 3299 02 + SLC 40 3299 08 0 6.3 Telephone SLC 40 3499 02 + SLC 40 3499 08 0 Amounts Recovered from Unconsolidated Entities 7.0 6.4 Electricity (Principal) SLC 74 3030 01 328,000 6.5 Electricity (Interest) SLC 74 3030 02 15,170 6.6 Gas and Telephone (Principal) SLC 74 3040 01 + SLC 74 3050 01 0 6.7 Gas and Telephone (Interest) SLC 74 3040 02 + SLC 74 3050 02 0 6.8 SUBTOTAL Add Lines 6.1 thru 6.7 [ 343,1701 PAYMENTS TO PROVINCE FOR DOWNTOWN REVITALIZATION PROGRAM LOANS SLC 42 5410 01 0 8.0 DEBT CHARGES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 40 1850 02 + SLC 40 1850 08 0 Page: 02 of 03 Date Prepared: June 8, 2004 DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT 11.0 12.0 TOTAL REVENUE FUND REVENUES* FEES FOR REPAYING THE PROVINCE FOR DOWNTOWN REVITALIZATION LOANS SLC 10 9910 01 49,789,108 SLC 42 5410 01 0 13.0 FEES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 12 1850 04 0 14.0 GRANTS FROM GOVERNMENT OF ONTARIO, GOVERNMENT OF CANADA AND OTHER MUNICIPALITIES 15.0 14.1 Ontario Grants SLC 10 0699 01 + SLC 10 0810 01 219,006 14.2 Canada Grants SLC 10 0820 01 10,057 ] 4.3 Other Municipalities SLC 10 1099 01 57,920 14.4 SUBTOTAL Add Lines 14.1 thru 14.3 [ 286,9831 FEES AND REVENUES FOR JOINT LOCAL BOARDS FOR HOMES FOR THE AGED 0 i6.0 NET REVE~ ~ ~NUES Lines ilies~ Lines 1211311~1411 17.0 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: June 8, 2004