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Home My WebLink AboutCS 24-06 04~) C¡ú/ 0# REPORT TO EXECUTIVE COMMITTEE Report Number: CS 24-06 Date: May 8, 2006 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2006 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 2006 Debt and Obligation Repayment Limit. Debt for these purposes includes all forms of loans, leases and other long term financial obligations and commitments. The 2006 Annual Repayment Limit (ARL) was calculated based on 25 percent of 2004 net own-source revenues as reported in City of Pickering's 2004 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 2006 ARL based on 25% of net revenue fund, after taking into account net debt charges reported to MMAH is $11,875,565. This is based upon the 2004 Financial Information Return. Based on the 2006 Budget, the total annual principal and interest charges and all other financial obligations as recorded in the City's books are $3,391,447 out of which $1,806,294 for external debt has been reported to the MMAH as required. Taking into account the difference of $1,585,153 ($3,391,447 - $1,806,294), being the amount included in the City's books for additional annual charges pertaining to 2005 borrowings ($765,617), estimated committed annual charges for 2006 budgeted loans and debentures ($633,317) and the balance for photocopiers contracts, internal telephone lease, and dealer financing of small vehicles, the net ARL available for 2006 would have to be reduced to $10,290,412. Report CS 24-06 Date: May 8, 2006 04 6 Subject: 2006 Annual Repayment Limit for Debt and Financial Obligation Page 2 The net ARL of $10,290,412 for 2006, 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 afford ability 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, 2004 to commit to payments relating to debt and financial obligations. The limit is effective January 1, 2006. For illustration purposes, if the City could borrow at 7%, the rate used by MMAH in the calculation, the net ARL of $10,290,412 would allow it to undertake additional long term borrowing as follows: Terms a) 5 years b) 10 years c) 15 years d) 20 years Debt Amount ($j 42,192,720 72,275,548 93,724,188 109,016,771 Attachments: 1. Letter from the Ministry of Municipal Affairs and Housing dated January 18, 2006 Prepared By: Approved I Endorsed By: .0A~ Caryn Kong Senior Financial Analyst -;1''' " ~~;'~:::-~"'..:...-jÞ ..,~:'./ = ~.... . .."..~ Gillis A. Paterson .. .. Director, Corporate Services & Treasurer GAP:ck Attachment Copy: Chief Administrative Officer Recommended for the consideration of Pickering City Council .. I " ,,,,,",,.' _...- ..' " . , / '''77 ~/'- }homás J. Quinn, DMR., \ Chief Administrative Officer ; ,; .----".. 047 Ministry of Municipal Affairs and Housing " & r.CHMENT#-t-TOREPORT#.Li..·QY- ()~ Ministère des ~ 0 / t ,", · Affaires municipales \} n a r 10 et du Logement Municipal Finance Branch 777 Bay Street, 13th Floor Toronto ON M5G 2E5 Phone: (416) 585-6951 Fax: (416) 585-6315 777, Rue Bay, 13" étage Toronto ON M5G 2E5 Téléphone: (416) 585-6951 Télécopieur: (416) 585-6315 RECEIVED CITY ('¡IF PICKERING .JAI\J .L U 2006 January 18, 2006 CORPORATE SERVICES Dear Municipal Treasurer, Clerkffreasurer: I am pleased to enclose a report showing your municipality's 2006 Annual Repayment Limit (ARL) respecting long-term debt and financial obligations. Your 2006 ARL was calculated based on 25 percent of your 2004 net own source revenues as reported in your 2004 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 1;)22(06.195) 04R Ministry of Municipal Affairs and Housing 777 Bay Street, Toronto. Ontario. M5G 2£5 Ministère des affaires municipales et du logement 777 rue Bay Toronto (Ontario) M5G 2E5 ANNUAL REPAYMENT LIMIT (UNDER ONTARIO REGULATION 403/02) MMA CODE: 10102 MUNID: 18001 MUNICIPALITY: Pickering C UPPER TIER: Durham R REPAYMENT LIMIT: C $11,875,565 The repayment limit has been calculated based on data contained in the 2004 Financial Information Return, as submitted to the Ministry. This limit represents the maximum amount which the municipality had available as of December 31, 2004 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 effecti ve J an uary 01, 2006. 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 12,2006 (':4':1 DETERl\rIINA TION OF ANNUAL DEBT REPAYMENT LIMIT MUNICIPALITY: Pickering C MMAH CODE: 10102 1.0 GROSS DEBT CHARGES 1.1 Principal SLC 74 3099 01 1,112,276 1.2 Interest SLC 74 3099 02 694.018 1.3 SUBTOTAL Add Lines 1.1, 1.2 1,806,2941 2.0 DEBT CHARGES ON new.A. PROVINCIAL PROJECT 2.1 Water Projects -- this municipality only SLC 742810 03 0 2.2 Water Projects -- share of integrated project(s) SLC 74282003 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 LIABILmES SLC 42601001 0 4.0 SUBTOTAL· DEBT CHARGES Add Lines 1.3,2.5,3.0 1,806,2941 5.0 AMOUNTS RECOVERED FROM UNCONSOLIDATED ENTITIES 5.1 Electricity (Principal) SLC 74 3030 01 0 5.2 Electricity (Interest) SLC 74 3030 02 0 5.3 Gas and Telephone (Principal) SLC 74 3040 01 + SLC 74 3050 01 0 5.4 Gas and Telephone (Interest) SLC 74 3040 02 + SLC 74 3050 02 0 5.5 SUBTOT.A.L Add Lines 5,1 thru 5.4 01 6.0 PAYMENTS TO PROVINCE FOR DO\VNTOWN REV1TALIZATION PROGRAM LOA.!\iS SLC 42541001 0 7.0 DEBT CHARGES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 40185002 + SLC 40185008 0 8.0 SUBTOTAL· DEBT CHARGES TO BE EXCLUDED Add Lines 5.5,6.0,7.0 01 9.0 NET DEBT CHARGES 1,806,2941/ Page: 02 of 03 Date Prepared: January 12,2006 (¡GO DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT MUNICIPALITY: Pickering C MMAH CODE: 10102 10.0 TOTAL REVENUE FUND REVENUES SLC 109910 01 55,409,179 11.0 FEES FOR REPAYING THE PROVINCE FOR DOWNTOWN REVITALIZATION LOANS SLC 42 5410 01 o 12.0 FEES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 12185004 o 13.0 GRANTS FROM GOVERNMENT OF ONTARIO, GOVERNMENT OF CANADA AND OTHER MUNICIPALITIES 13.1 13.2 13.3 Ontario Grants Canada Grants Other Municipalities SLC 10069901 + SLC 100810 01 SLC 10 0820 01 SLC 10 109901 310899 6,734 364,109 681,7421 13.4 SUBTOTAL Add Lines 13.1 thm 13.3 14.0 FEES AND REVENUES FOR JOINT LOCAL BOARDS FOR HOMES FOR THE AGED o 15.0 NET REVENVE FUND REVENUES Lines 10 less Lines 11,12,13.4,141 54,727,4371 13,681,8591 16.0 25% OF NET REVENUE FUND REVENUE 17.0 ANNUAL REPAYMENT LIMIT 25% of Net Revenue Fund Revenues less Net Debt Charges 11,875,56 SLC denotes Schedule, Line, Colunm FOR ILLUSTRA nON PURPOSES ONLY If the municipality could borrow at 7.0% or 9.0% annually, the annual repayment limit shown in 17 above would allow it to undertake additionallong-terrn borrowing as follows: 7.0% Interest Rate: (a) 20 years @ 7.0% p.a. (b) 15 years @ 7.0% p.a. (c) 10 years @ 7.0% p.a. (d) 05 years @ 7.0% p.a. 125,809,907 108,161,627 83,409,001 48,692,162 9.0% Interest Rate: (a) 20 years @ 9.0% p.a. (b) 15 years @ 9J)% p.a. (c) 10 years @ 9.0% p.a. (d) 05 years @ 9.0(Æ p.a. 108.406,640 95,725,231 76,213,313 46,] 91 ,807 Page: 03 of 03 Date Prepared: January 12,2006