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Home My WebLink AboutCS 12-07 REPORT TO EXECUTIVE COMMITTEE J't. t:'l.. '" l;,,~ Report Number: CS 12-07 Date: February 26, 2007 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2007 Annual Repayment Limit for Debt and Financial Obligations Recommendation: That Report CS 12-07 of the Director, Corporate Services & Treasurer regarding the 2007 Annual Repayment Limit for Debt and Financial Obligations be received for information. Executive Summary: Not applicable Financial Implications: Not applicable Sustainability Implications: An update to the Annual Repayment Limit is required to determine the annual repayment limit for both internal and external borrowings. This update is required to enable the City to borrow externally. Background: Recently, the Ministry of Municipal Affairs and Housing (MMAH) provided information regarding the City's 2007 Debt and Obligation Repayment Limit. Debt for these purposes includes all forms of loans, leases and other long term financial obligations and commitments. The 2007 Annual Repayment Limit (ARL) was calculated based on 25 percent of 2005 net own-source revenues as reported in City of Pickering's 2005 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 2007 ARL based on 25% of net revenue fund, after taking into account net debt charges reported to MMAH is $12,415,661. This is based upon the 2005 Financial Information Return. Based on the 2007 Budget, the total annual principal and interest charges and all other financial obligations as recorded in the City's books are Report CS 12-07 February 26, 2007 Subject: 2007 Annual Repayment Limit for Debt and Financial Obligations Page 2 no~:~ t \:J;. ,J $3,054,937 out of which $2,561,142 for the annual charges has been reported to the MMAH as required. Taking into account the difference of $493,795 ($3,054,937 - $2,561,142), being the amount included in the City's books for annual charges pertaining to 2006 and 2007 borrowings ($405,995), and the balance ($87,800) for photocopiers contracts, internal telephone financing and dealer financing of a small vehicle, the net ARL available for 2007 would have to be reduced to $11,921,866. The net ARL of $11,921,866 for 2007, 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, 2005 to commit to payments relating to debt and financial obligations. The limit is effective January 1,2007. For illustration purposes, if the City could borrow at 7%, the rate used by MMAH in the calculation, the net ARL of $11,921,866 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 ($1 48,882,004 83,734,198 108,583,330 126,300,418 Attachments:' 1. Letter from the Ministry of Municipal Affairs and Housing dated January 16, 2007 Prepared By: Approved I Endorsed By: ~~~:~.~---:~~>> _....."....~~. .., . __ .-,'.,C"' C"......: ~_._"_....._-'~ .m......::~%:==::=?-=-.- ....Gilli~=Pa1efs"on... ... . Director, Corporate Services & Treasurer 9~-~! Caryn Kong Senior Financial Analyst GAP:ck Attachment Copy: Chief Administrative Officer Report CS 12-07 February 26, 2007 Page 3 Subject: 2007 Annual Repayment Limit for Debt C: 9 6: and Financial Obligations Recommended for the consideration of Pickering City Council ---\ ! !I #_Loro REPORT#~/c2-0 7 @ Ontario Ministry of Municipal Affairs and Housing Ministere des Affaires municipalns 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' etage Toronto ON M5G 2E5 Telephone: (416) 585-6951 Telecopieur: (416) 585-6315 ~\ 0 "''1 t.' ;). t if=F' "'"'= 1I~' ::;RiNG /l\I\) '2 5' "! Cor"'''"'''r~ ....., "W"_~ I, ''1r''\,j{iAl ~ '~j'::P'\IIC~r::::(',. ...._" I."" '.,... l~.. ~ .! !.; II,;}!. January 16, 2007 Dear Municipal Treasurer, Clerk/Treasurer: I am pleased to enclose a report showing your municipality's 2007 Annual Repayment Limit (ARL) respecting long-term debt and financial obligations. Your 2007 ARL was calculated based on 25 percent of your 2005 net own source revenues as reported in your 2005 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 fUliher 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(06/951 ~\ ,.., f'"': \ " . I", .00 Ministry of Municipal Affairs and Housing 777 Bay Street, Toronto, Ontario, M5G 2E5 A1inistc:re des affaires municipales et du logement 777 me Bay Toronto (Ontario) M5G 2E5 ANNUAL REPAYMENT LIMIT (UNDER ONTARIO REGULATION 403/02) MMA CODE: 10102 MUNID: 18001 MUNICIPALITY: Pickering C UIIPER TIER: Durham R REPAYMENT LIMIT: C$12,415,661 The repayment limit has been calculated based on data contained in the 2005 Financial Information Return, as submitted to the Ministry. This limit represents the maximum amount which the municipality had available as of December 31, 2005 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, 2007. FOR ILLUSTRATION PURPOSES ONLY, the additionallong-tenn 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 8, 2007 DETERlVIINATION OF AN~r\L DEBT REPAY~IENTLI~lIT ,'~ 0 ro. t\.lV MC\'ICIPALITY: Pickering C MMAH CODE: 10102 5.0 A.MOUNTS RECOVERED FROM UNCONSOLIDATED ENTITIES 5.1 5.2 5.3 5.4 ElectJicity (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 o o o o 01 5.5 SUBTOTAL Add Lines 51 thru 5.4 6.0 PAYMENTS TO PROVINCE FOR DOWNTOWN REVITALIZATION PROGRAM LOANS SLC 425410 01 o 7.0 DEBT CHARGES FOR TILE DRAINAGE AND SHORELINE ASSrSTAJ-JCE SLC 40 1850 02 + SLC 40 1850 08 o 8.0 SUBTOTAL - DEBT CHARGES TO BE EXCLUDED Add Lines 5.5,6.0,7.0 c 01 2,561,14211 9.0 NET DEBT CHARGES Date J?:repared: January 8,2007 !age: 02 of 03 1 GODETERMINATION OF ANNUAL DEBT REPAYlVIENT LIl\1IT MUNICIPALITY: Pickering C MMAH CODE: 10102 10.0 TOTAL REVENUE FUND REVENUES SLC 109910 01 60,384,097 11.0 FEES FOR REP A YING THE PROVINCE FOR DOWNTOWN REVITALIZATION LOANS SLC 42 5410 01 o 12.0 FEES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 12 185004 o 13.0 GRANTS FROM GOVERNMENT OF ONTARlO, GOVERNMENT OF CANADA A."TD OTHER MUNICIPALITIES 13.1 13.2 13.3 Ontario Grants Canada Grants Other Municipalities SLC 10 069901 + SLC 10081001 SLC 100820 OJ SLC JO 109901 358,851 47,674 70,360 476,8851 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 REVENUE FUND REVENUES Lines 10 less Lines 11,12,13.4,141 59,907,212/ 14,976,803/ 12,415,66111 16.0 25% OF NET REVENUE FUND REVENUE 17.0 ANNUAL REI' A YMENT LIMIT 25% of Net Revenue Fund Revenues less Net Debt Charges II SLC denotes Schedule, Line, Column FOR ILLUSTRATION 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-tenTI 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. 131,531,690 113,080,773 87,202,407 50,906,661 9.0% Interest Rate: (a) 20 years @ 9.0% p.a. (b) 15 years @ 9.0% p.a. (c) 10 years @ 9.0% p.a. (d) 05 years @ 9.0% p.a. 1] 3,336,928 100,078,775 79,679,462 48,292,591 Page: 03 of 03 Date Prepared: January 8, 2007