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Home My WebLink AboutCS 32-05PICKERING REPORT TO EXECUTIVE COMMITTEE Report Number: CS 32-05 Date: April 25, 2005 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2005 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 2005 Debt and Obligation Repayment Limit. Debt for these purposes includes all forms of loans, leases and other long term financial obligations and commitments. The 2005 Annual Repayment Limit (ARL) was calculated based on 25 percent of 2003 net own-source revenues as reported in City of Pickering's 2003 Financial Information Report (FIR) submitted to the Ministry of Municipal Affairs and Housing (MMAH). 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 2005 ARL, 25% of net revenue fund, after taking into account net debt charges is $11,449,747. Based on the 2005 Budget, the total annual principal and interest charges and all other financial obligations as recorded in the City's books are $2,500,371. The difference of $866,469 ($2,500,371 - $1,633,902), being the increase in debt charges (approximately $800,000) since 2003 and other financial obligations such as photocopier leases, and small vehicle financings, the ARL available for 2005 would have to be reduced to $10,583,278. Report CS 32-05 Subject: 2005 Annual Repayment Limit for Debt and Financial Obligation Date: April 25, 2005 Page 2 The net ARL of $10,583,278 for 2005, 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, 2003 to commit to payments relating to debt and financial obligations. The limit is effective January 1,2005. For illustration purposes, if the City could borrow at 7%, the rate used by MMAH in the calculation, the net ARL of $10,583,278 would allow it to undertake additional long term borrowing as follows: Terms a) 5 years b) 10 years c) 15 years d) 20 years Debt Amount ($) 43,393,529 74,332,516 96,391,585 112,119,398 Attachments: 1. Letter from the Ministry of Municipal Affairs and Housing dated January 18, 2005 Prepared By: Approved / Endorsed By: Caryn K'ong Senior Financial Analyst Gillis A. Paterson Director, Corporate Services & Treasurer GAP:ck Attachment Copy: Chief Administrative Officer Recommended for the consideration of Pickeri T~as-J4 ~nn, ~ief Administ~~ 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 January 18, 200~ ;~T'i'^CHMENI~ ~_L._TO REPOP, T#./L~ ~-' Minist~,re des Affaires municipales et du Logement 777, Rue Bay, 130 ~tage Toronto ON M5G 2E5 T61~phone: (416) 585-6951 T~l~copieur: (416) 585-6315 Ontario ~rY OF PICKERir~':.:: Dear Municipal Treasurer, Clerk/Treasurer: I am pleased to enclose a report showing your municipality's 2005 Annual Repayment Limit (ARL) respecting long-term debt and financial obligations. Your 2005 ARL was calculated based on 25 percent of your 2003 net own source revenues as reported in your 2003 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, Janet Hope 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 2003 Financial Information Return, as submitted to the Ministry. This limit represents the maximum amount which the municipality had available as of December 31, 2003 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, 2005. 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: January 6, 2005 DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT 1.0 GROSS DEBT CHARGES 1.1 Principal SLC 74 3099 01 991,724 1.2 lnterest SLC 74 3099 02 642,178 1.3 SUBTOTAL Add Lines 1.1, 1.2 ] 1,633,9021 2.0 DEBT CHARGES ON O.C.W.A. PROVINCIAL PROJECT 2.1 Water Projects -- this municipality only SLC 74 2810 03 0 2.2 Water Projects -- share 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 [ 01 3.0 PAYMENT IN RESPECT OF LONG TERM COMMITMENTS AND LIABILITIES SLC 42 6010 01 0 5.0 DEBT CHARGES FOR MUNICIPAL UTILITIES 5.1 Electricity SLC 40 3099 02 + SLC 40 3099 08 0 5.2 Gas SLC 40 3299 02 + SLC 40 3299 08 0 5.3 Telephone SLC 40 3499 02 + SLC 40 3499 08 0 Amounts Recovered from Unconsolidated Entities 5.4 Electricity (Principal) SLC 74 3030 01 0 5.5 Electricity (Interest) SLC 7413030 02 0 5.6 Gas and Telephone (Principal) SLC 74 3040 01 + SLC 74 3050 01 0 5.7 Gas and Telephone (Interest) SLC 74 3040 02 + SLC 74 3050 02 0 5.8 SUBTOTAL Add Lines 5.1 thru 5.7 [ 01 6.0 PAYMENTS TO PROVINCE FOR DOWNTOWN REVITALIZATION PROGRAM LOANS SLC 42 5410 01 0 7.0 DEBT CHARGES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 40 1850 02 + SLC 40 1850 08 Page: 02 of 03 Date Prepared: January 6, 2005 DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT 10.0 11.0 12.0 13.0 14.0 TOTAL REVENUE FUND REVENUES SLC 10 9910 01 53,388,002 FEES FOR REPAYING THE PROVINCE FOR DOWNTOWN REVITALIZATION LOANS SLC 42 5410 01 0 FEES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 12 1850 04 0 GRANTS FROM GOVERNMENT OF ONTARIO, GOVERNMENT OF CANADA AND OTHER MUNICIPALITIES 13.1 Ontario Grants SLC 10 0699 01 + SLC 10 0810 01 735,470 13.2 Canada Grants SLC 10 0820 01 15,554 13.3 Other Municipalities SLC 10 1099 01 302,383 13.4 SUBTOTAL Add Lines 13.1 thru 13.3 I 1,053'4071 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 Page: 03 of 03 Date Prepared: January 6, 2005