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HomeMy WebLinkAboutCS 19-08 Citll 0# REPORT TO EXECUTIVE COMMITTEE Report Number: CS 19-08 Date: May 12, 2008 1 29 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Final Approval for Financing of Council Approved Capital Project - External Borrowing Through the Issuance of Debentures Recommendation: 1. That Report CS 19-08 from the Director, Corporate Services & Treasurer be approved; 2. That the Director, Corporate Services & Treasurer be authorized to: a) undertake long term financing through the issuance of debentures through the Regional Municipality of Durham up to a maximum amount of $630,000 for a period not exceeding 15 years for the Ice Rink 2 Renovations at the Don Beer Arena; b) undertake the financing of this project or portions thereof that cannot be accommodated through the foregoing through internal loans or a financial institution offering long term financing under similar terms and conditions; c) make any changes, adjustments, and revisions to amounts, terms and conditions or any other actions necessary in order to effect the above directions of Council; 3. That the costs of undertaking the financing, currently estimated at approximately $5,000 be charged to the 2008 Current Budget, General Government-Annual Charges Debentures & Loans Repayment; 4. That the estimated annual repayment costs of principal and interest amounting to approximately $65,000 be included in the 2009 Current Budget and thereafter until the debentures is repaid; 5. That the Director, Corporate Services & Treasurer be directed and authorized to finance any capital projects, the financing for which is not specifically approved by Council, through the issuance of debentures or long term financing arrangements, through the Regional Municipality of Durham, a financial institution, internal loans or whatever means necessary at the discretion of the Treasurer; Report CS 19-08 May 12, 2008 Subject: Final Approval for Financing of Council Approved Page 2 Don Beer Arena Rink 2 Renovations- External Borrowing Through the 13 (llssuance of Debentures 6. That the Director, Corporate Services & Treasurer be authorized to engage the services of any individual or firm, legal or otherwise, necessary to assist in the preparation of documentation, completion of an undertaking and any other aspects in regards to the financing of capital projects; 7. That the Director, Corporate Services & Treasurer be authorized to apply any excess proceeds raised to other capital projects for which long-term financing is required, as is permitted under the Municipal Act, 2001; 8. That the attached draft by-law, providing for the authorization for the issuance of debentures, be enacted; and, 9. That the appropriate officials of the City of Pickering be given authority to give effect thereto. Executive Summary: At the time of writing, the Regional Municipality of Durham has indicated the possibility of going to the market in the spring/summer of 2008. This Report to Council serves to seek Council approval in order to provide formal documentation to the Regional Municipality of Durham and to enact a by-law for the authorization for the issuance of debentures for the Don Beer Arena Ice Rink 2 Renovations. The Director, Corporate Services & Treasurer has certified that this loan and the repayment thereof falls within the City's Debt and Financial Obligations approved Annual Repayment Limit for debt and other financial obligations for 2008 as established by the Province for municipalities in Ontario. Financial Implications: If the Regional Municipality of Durham proceeds with the official issue sometime in the spring/summer, the City would be liable for at least six months of interest payment for 2008. Though this debenture issue was not included in the provision for 2008 annual charges, there will be sufficient funds budgeted as annual (one principal and two interest) payments for the forthcoming Council approved $4,410,000 debentures issue. It is unlikely that the annual provision be required due to the timing of the issue (a maximum of six months of interest). As per Report to Council OES 10-08, the balance amount of $3,200 will be funded from the 2008 Current Budget. Report CS 19-08 May 12, 2008 Subject: Final Approval for Financing of Council Approved Page 3 Don Beer Arena Rink 2 Renovations- External Borrowing Through the Issuance of Debentures '1 ,s'l Sustainability Implications: This financing is necessary to provide the financial means to sustain the City's capital investments in infrastructure. Background: While long term financing (internal and external) was always generally approved by Council during the annual capital budgeting process and/or through specific reports, there has never been a specific formal approval by the Council for capital projects requiring such financing with the terms and conditions being specified in detail. This formal request by Council is normally done by Corporate SeNices on an annual basis every fall and request to enact the debenture by-laws be done at the same time. At the time of writing, the Regional Municipality of Durham has indicated the possibility of going to the market in the spring/summer of 2008. This Report to Council seNes to seek Council approval in order to provide formal documentation to the Regional Municipality of Durham for the issuance of debentures for the Don Beer Arena Ice Rink 2 Renovations (OES10-08). Normally, all external debentures requested by an area municipality are issued through the Regional Municipality of Durham. However, if there may be other more cost effective means of financing available, the Treasurer may resort to these alternatives. Alternate financing may be desirable or necessary for some portions of the City's requirements. The Recommendations allow for the best course of action to take place. The recommendations also provide a limited degree of flexibility in the event that the documentation for projects or portions thereof is insufficient to meet the legal requirements for a debenture issue in that the project can then be financed through other means. They also provide for some flexibility with the treatment of excess proceeds that may be raised as a result of the market conditions (i.e. issued as a premium) or excess funds resulting once project costs are complete and final. The costs of financing of approximately $5,000 have been included in the 2008 Current Budget. This cost represents commissions, legal fees, and registration for debentures with the Canadian Depository for Securities (C.D.S.) and any discount upon sale. Attachments: 1. By-law to Confirm the Authorization of the Issuance of Debentures in the Amount of $630,000 for Don Beer Arena Rink 2 Renovations. Report CS 19-08 May 12, 2008 Subject: Final Approval for Financing of Council Approved Page 4 Don Beer Arena Rink 2 Renovations- External Borrowing Through the '1 ,) 2 Issuance of Debentures Prepared By: Approved I Endorsed By: ~~ -' ') ~ - ,~----~ _ c~A~~~~_~______ Gillis A. Paterson Director, Corporate Services & Treasurer Caryn Kong Senior Financial Analyst GAP:ck Attachments Copy: Chief Administrative Officer Recommended for the consideration of Pickering City.council :/ // I ATTACHMENT # TO REPORT # C 'j J I? THE CORPORATION OF THE CITY OF PICKERING BY-LAW NO. '1 3-5 Being a By-law to confirm the authorization of the issuance of debentures in the amount of $630,000 for the Don Beer Arena Rink 2 Renovations in the City of Pickering WHEREAS Section 11 of the Municipal Act, 2001, as amended, provides that a lower- tier municipality may pass by-laws respecting matters within the spheres of jurisdiction described in that Section; and, WHEREAS Subsection 401 (1) of the Municipal Act, 2001, as amended, provides that a municipality may incur a debt for municipal purposes, whether by borrowing money or in any other way; and, WHEREAS Subsection 401 (3) of the Municipal Act, 2001, as amended, provides that a lower-tier municipality in a regional municipality does not have the power to issue debentures; and, WHEREAS The Regional Municipality of Durham has the sole authority to issue debentures for the purposes of its lower-tier municipalities including The Corporation of the City of Pickering (the "City"); and, WHEREAS the Council of the City approved Report OES 10-08 at its meeting of April 21, 2008 pursuant to Resolution 82/08 and awarded Tender T-1-2008 for the Don Beer Arena Rink 2 Renovations at that meeting; and, WHEREAS the Council of the City is proceeding with the Don Beer Arena Rink 2 Renovations in the City of Pickering; and, AND WHEREAS before the Council of the City authorized the Don Beer Arena Rink 2 Renovations, the Council of the City had the Treasurer update the City's Annual Repayment Limit, the Treasurer calculated the estimated annual amount payable in respect of such project and determined that such annual amount would not cause the City to exceed the updated Limit and, therefore, Ontario Municipal Board approval was not required prior to City Council's authorization as per Section 401 of the Municipal Act, 2001, as amended, and the regulations made thereunder. NOW THEREFORE, BE IT ENACTED AND ITS IS HEREBY ENACTED AS A BY-LAW OF THE CORPORATION OF THE CITY OF PICKERING AS FOLLOWS: 1. That the estimated costs of the Don Beer Arena Rink 2 Renovations in the amount of $633,200 be financed as follows: 1 3 it a) That the sum of $630,000 be financed by the issue of debentures by The Regional Municipality of Durham over a period not to exceed fifteen (15) years; b) That the balance of $3,200 be funded from the 2008 Current Budget; 2. That the funds to repay the principal and interest of the debentures be provided for in the annual Current Budget for the City commencing in 2009 and continuing thereafter until the loan is repaid. By-law read a first, second and third time and finally passed this 20th day of May, 2008. Mayor City Clerk