HomeMy WebLinkAboutCS 02-11
ear Report To
Executive Committee
PICKERING Report Number: CS 02-11
Date: January 10, 2011
18
From: Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject: 2011 Temporary Borrowing By-law
Recommendation:
1. That Report CS 02-11 from the Director, Corporate Services & Treasurer be
received;
2. That the temporary borrowing limit to meet 2011 current expenditures pending
receipt of taxes and other revenues be established at $34,600,000 for the period
January 1, 2011 to September 30, 2011 inclusive, and $17,300,000 thereafter until
December 31, 2011;
3. That the temporary borrowing limit for capital purposes for 2011 be established at
$12,400,000;
4. That the attached draft by-law providing for the temporary borrowing of monies, be
enacted; and,
5. That the appropriate officials of the City of Pickering be authorized to take the
necessary actions to give effect thereto.
Executive Summary: Not applicable
Financial Implications: At this time, it is difficult to estimate the interest costs as it is
uncertain how much temporary financing may be required and for how long. With
internal borrowings being limited, we will be undertaking external borrowing from the
Regional Municipality of Durham (Region) in 2011 for approved capital expenditures.
For current purposes, the $33.8 million limit for 2010 has been increased to $34.6
million for 2011 and the $16.9 million has been increased to $17.3 million. The limit for
capital purposes for 2011 has been established at $12.4 million based on the first draft
(dated November 12, 2010) of the 2011 Capital Budget. This may have to be adjusted
once the 2011 Capital Budget has been approved.
Report CS 02-11 January 10, 2011
Subject: 2011 Temporary Borrowing By-law Page 2
Sustainability Implications: Council approval to undertake temporary borrowings, if
necessary, for current operations and capital projects is necessary in order to financially
sustain the City's operations. To date, it has not been necessary for the City to
undertake such temporary financing measures. However, approval is always sought at
the beginning of the fiscal year (calendar) in order to be prepared in the event that loans
are necessary.
Background: The borrowing of funds for current and capital purposes may become
necessary during the normal course of operations during 2011. Under the provisions of
Section 407 of the Municipal Act, 2001, (the Act), the Council of the City of Pickering
may pass a by-law to provide for the temporary borrowing of funds to meet current
operating expenditures, pending receipt of taxes and other revenues of the City. Under
the Act, the Corporation may also undertake temporary borrowings, under individual
project approvals, for capital projects pending permanent financing, including the
issuance of debentures by the Region.
Current Budget Financing
The amount of such temporary borrowing outstanding at any one time is generally
limited by the Act, unless otherwise approved by the Ontario Municipal Board, to 50% of
the estimated annual revenues from January 1St to September 30th and to 25%
thereafter.
Until the current year's estimates are adopted, the limitation may be calculated upon the
revenues set forth in the estimates adopted for the preceding year. Based upon the
2010 estimates of the Corporation, the allowable level of temporary borrowing
outstanding under legislation is estimated at $34,600,000 from January 1St to
September 30th and $17,300,000 thereafter.
The requested $34,600,000 should be sufficient to meet the current expenditures of the
City until the levies for 2011 are received. It is hoped that this amount will provide a
sufficient level of temporary borrowings taking into account the potential effects of
taxation legislation and its impact on cash flows.
Capital Budget Financing
Borrowing for capital purposes under the Act can only be undertaken on projects
approved by Council and will only be undertaken in the event that sufficient funds are
not available at the time they are required. Recommendation 3 provides the authority
for the Treasurer to obtain additional temporary interim financing (internal or external)
for capital projects approved by Council. The $12.4 million capital borrowing limit would
provide sufficient funds to cover the estimated 2011 capital expenditures.
Report CS 02-11 January 10, 2011
Subject: 2011 Temporary Borrowing By-law Page 3
20
Attachment:
1. By-law to authorize the temporary borrowing of monies to meet the current and
capital expenditures of the City of Pickering for the year 2011
Prepared By: Approved / Endorsed By:
JQ. Gr`
Caryn Kong Gillis A. Paterson
Senior Financial Analyst - Capital & Director, Corporate Services & Treasurer
Debt Management
GAP:ck
Copy: Chief Administrative Officer
Recommended for the consideration
of Pickering Ci Cou i
/ /0x2010
Tony Prevedel, P.Eng.
Chief Administrative Officer
2 ATTACHMENT #-4-TO REPORT #_L o _ l l
The Corporation of the City of Pickering
By-Law No.
Being a by-law to authorize the temporary
borrowing of monies to meet the current and
capital expenditures of the City of Pickering
for the year 2011.
Whereas Section 407(1) of the Municipal Act, 2001, provides that the Council of the
City of Pickering may by by-law authorize the Mayor and Treasurer of the Municipality to
borrow from time to time by way of promissory note such sums as the Council may
deem necessary to meet, until the taxes for the current year are collected and other
revenues are received, the current expenditures of the Municipality for the year,
including the amounts required for principal and interest falling due within the year upon
any debt of the Municipality, and the sums required by law to be provided by the Council
for any local board of the Municipality,
Whereas Section 407(2) limits the total of such borrowings to not exceed 50% of the
estimated annual revenues from January 1, 2011 to September 30, 2011 and 25%
thereafter;
Whereas it is deemed necessary by the said Council to borrow the sum of thirty-four
million, six hundred thousand dollars ($34,600,000) to meet, until the taxes for the
current year are received, the current expenditures of the Municipality for the year
2011, including the amounts and sums aforesaid,
Whereas the said sum of thirty-four million, six hundred thousand dollars ($34,600,000)
plus any similar borrowings that have not been repaid, is less than 50%'of the total
amount of the estimated revenues of the Municipality from January 1St to September
30th as set forth in the estimates adopted by the said Council for the year 2010
exclusive of revenues derivable from the sale of assets, borrowings or issues of
debentures or from a surplus including arrears of levies and $17,300,000 is less than
25% thereafter;
Whereas the Municipal Act, 2001, provides that if a municipality has by by-law approved
an undertaking to be financed in whole or in part by incurring long-term debt, the
Council may by by-law authorize temporary borrowing to meet expenditures made in
connection with the undertaking; and,
Whereas it is deemed necessary by the said Council to borrow the sum of twelve
million, four hundred thousand dollars ($12,400,000) to meet the capital expenditures
approved by Council.
By-law No. Page 2 .2 2
Now therefore the Council of the Corporation of the City of Pickering hereby enacts as
follows:
The Mayor and Treasurer of the City of Pickering are hereby authorized to borrow from
time to time by way of promissory notes a sum or sums not exceeding thirty- four
million, six hundred thousand dollars ($34,600,000) to meet, until the levies for the year
2011 are received, the current expenditures of the Municipality for such year, including
the amounts required for principal and interest falling due within the year upon any debt
of the Municipality for the period January 1, 2011 to September 30, 2011 inclusive and
$17,300,000 thereafter until December 31, 2011.
1. The Mayor and Treasurer of the City of Pickering are hereby authorized to borrow
from time to time by way of promissory notes a sum or sums not exceeding twelve
million, four hundred thousand dollars ($12,400,000) to meet the capital
expenditures as approved by Council, of the Municipality including the amounts
required for principal and interest.
3. Any promissory notes made under the authority of this by-law shall be sealed and
signed, in accordance with the provisions of the Municipal Act, 2001, and may be
countersigned in writing by the Manager, Accounting Services of the Corporation in
accordance with the provisions of the said Act.
4. This by-law shall come into effect on the first day of January, 2011.
By-law read a first, second and third time and finally passed this 17th day of January,
2011.
David Ryan, Mayor
Debbie Shields, City Clerk