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Home My WebLink AboutTR-8-98 , THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON REPORT GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Meeting: Date: March 2, 1998 -- File#~ Res. #(J()~~ 1;;L7-c1.3 Report #: Subject: TR-8-98 File #: By-law # ANNUAL DEBT REPAYMENT LIMIT Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report TR-8-98 be received for information. BACKGROUND AND COMMENT: 1.0 At the Council meeting of January 12, 1998, a letter from the Ministry of Municipal Mfairs and Housing detailing the Municipality's 1998 annual repayment limit respecting long-term debt and financial obligations (Attachment A) was referred to the Treasury Department for a report. LIOn an annual basis the Ministry of Municipal Mfairs and Housing calculates the municipality's annual repayment limit with respect to long-term debt and financial obligations. This amount represents the maximum allowable level of annual debt charges the municipality may incur. Based on this annual repayment amount the Ministry will extrapolate a maximum total long-term borrowing amount. 1.2 The calculation uses data contained in the financial information return which is submitted annually to the Ministry. The limit is calculated based on the assumption that annual debt charges should not exceed 25% of the municipality's current fund revenues. 8'01 / REPORT TR-8-98 PAGE 2 1.3 The first part of the calculation entails determining the municipality's existing net debt charges (see lines 1.0 to 9.0 of attached). Gross debt charges include debentures and any other long-term commitments or liabilities such as capital leases or Reserve Fund loans undertaken by all municipal entities including municipal utilities. In deriving the municipality's net debt charges, amounts recovered from unconsolidated entities such as the utilities are excluded. 1.4 The second part calculates the 25% level of the current fund revenues (see lines 10.0 to 18.0 of attached). The primary sources or current fund revenues are taxation and user fees. Government grants and contributions from the Capital Fund and the Reserve Fund are excluded from revenue for purpose of the calculation. 1.5 The net debt charges incurred by the municipality (line 9.0) are then netted against the 25% level of current fund revenues (line 18.0) which derives the annual repayment limit (line 19.0). 1.6 The available limit calculated for 1998 is $4,172,169.00. For 1997 the actual debt charges were $874,298.75 with a budget amount of 874,553.00 for 1998. Thus the municipality is well within the prescribed limit. 1. 7 The longterm borrowing capacity still available to the municipality for 5 to 20 year borrowing terms is also identified at the end of the attachment. The normal borrowing term for the municipality has been 15 years, and with an interest rate of 10.5 %, the attachment identifies that additional borrowing capacity is $30,848,284. Again this indicates the municipality is in a desirable position for borrowing capacity. 802 REPORT TR-8-98 PAGE 3 Respectfully submitted, Reviewed by, /" // //~(ii lilT: Ma~i{ A. Marano, H.BSc.,A.M.C.T., Treasurer. 1~ W.H. Stockwell, Chief Administrative Officer. MAM/KS/km Attachments 803 r'~' r I COUNCIL INFORMATION ATTACHMENT A I - 11 DEe 30 @ Ontario z 09 PM ~lnicipal Finance Branch 13th Floor, 777 Bay Street Toronto ON M5G 2E5 Tel: (416) 585-6951 Fax: (416) 585-6315 Ministry of Municipal Affairs and Housing Mlnistere des Affalres munlclpales et du Logement December 19, 1997 Dear Municipal Treasurer, Clerkffreasurer: I am pleased to enclose a report showing your municipality's 1998 annual repayment limit respecting long-term debt and financial obligations. The method used for calculating your municipality's 1998 debt and financial obligation limit is based on the principle that annual payments relating to debt and financial obligations of a municipality should not be more than 25 per cent of own source revenue fund revenues. As a result of the proposed changes resulting from education finance reform, the ministry is proposing to take into account the additional own source revenue that each municipality may be afforded. However, given that the information needed to recalculate the repayment limits in this manner was not available when the limits were calculated, the ministry is proposing to issue the annual repayment limits in two phases. The first phase is based on the current method for calculating the repayment limit and is included for your municipality in order to provide you with the information needed to proceed with immediate 1998 business. The second phase would occur early in the new year. at which time the ministry would issue an updated repayment limit that would include an adjustment for potential changes to municipal own source revenues that may result from education finance reform. If you require any further information, please contact the appropriate Regional Operations Branch office of the Ministry of Municipal Affairs and Housing (list enclosed). Yours tru\. ~..~ Nancy 83..: decki Director Enclosures 7~r~ l i 804 ~c- .I Ci:.- , . r.:f!o(;~.' ;~~0_.~::.~ .?iE:.::'~J!,:,,!:>:: SOUTHWESTERN: Brant I 495 Richmond S1. 7th Floor Bruce London ON N6A 5A9 Elgin ~ 19) 673-1611 Essex I oil Free #: 1-800-265-4736 Grey FAX: (519) 661-1677 Haldimand-Norfolk Huron Kent I Lambton Middlesex Oxford I Perth Waterloo Wellington CENTRAL: Dufferin I 700 Lawrence Ave. W. Durham Suite 362 Halton North York ON M6A 3B4 Hamilton-Wentworth I ~16) 327-0017 Metro Toronto all Free #: 1-800-668-0230 Muskoka FAX: (416) 327-0980 Niarara Pee - Simcoe York EASTERN: F rontenac [ Postal Bag 2500 Haliburton 752 King S1. West Hastings Rockwood House Lanark [ Kingston ON K7L 5S3 Leeds & Grenville ~13) 548-4304 Lennox & Addington oll Free #: 1-800-267-9438 Northumberland FAX: (613) 548-6822 Ottawa-Carleton I Peterborough Prescott-Russell Prince Edward Renfrew f Stormont, Dundas " and Glengarry Victoria NORTHEASTERN: Algoma l 159 Cedar Street - Suite 401 Cochrane Sudbury ON P3E 6A5 Manitoulin I V05) 564-0120 Nipissing all Free #: 1-800-461-1193 Parry Sound FAX: (705) 564-6863 Re~lOn of Sudbury Su bury I Timiskaming NORTHWESTERN: Kenora 435 James S1. So, Suite 223 Rainy River l. Thunder B~v ON P7E 6S7 Thunder Bay (807)475-1651 Tnll Free #: 1-800-465-5027 [ F:\X: (80n 475-1196 1 = '97 1 805 y ... . ,._ "' ~_"_,, 0 o~..., , J'I~ . (d /~J'~? '>' :tl1 fy ~ I l_ . 0 ... ......~."..."..-.,;::.~_"'. ..~..~.:.l REGIONAL OPERATIONS BRANCH MINISTRY OF MUNICIPAL AFFAIRS AND HOUSING - r Minist/:v of Municipal Affairs and Housing 777 Bay Street Toronto, Olltario M5G 2D Ministere des Affaires municipales et du Logement 777 rue Bay Toronto (On/ario) M5G 2E5 ANNUAL REPAYMENT LIMIT UNDER ONTARIO REGULATION 799/94 MMA CODE: 10402 MUNID: 18017 MUNICIPALITY: Clarington T UPPER TIER: Durham R REPAYMENT LIMIT: $4,172,169 The repaymem limit has been calculated based on data contained in the 1996 Financial Information Return, submitted to the Ministry. This limit represents the maximum amount which the municipality had available as at December 31. 1996 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 prescri~d manner. The limit is effective January 01, 1998. 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 "fO_~ Date Prepared: 15-0ec-97 806 DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT --~- -- - ---.-- --------- - ----_.-------------~~~------ M~~C~DE:-IO~~- ~-: I MUNICIPALITY: Clarington T ---_.~---------~~----~-- 1.0 GROSS DEBT CHARGES \.1 Principal I .2 Interest PL 127801 PL 12 78 02 561,863 558,611 1.3 SUBTOTAL Add Lines 1.1, 1.2 _~__UI ._._____.J.J20,47-~ ! 2.0 DEBT CHARGES ON O.C.W.A. PROVlNCIAL PROJECT 2.1 2.2 2.3 2.4 Water Projects - this municipality only Water Projects - share ofintegrated project(s) Sewer Projects - this municipality only Sewer Projects - share of integrated project(s) PL 1246 03 PL 124703 PL 1248 03 PL 124903 2.5 SUBTOTAL Add Lines 2.1 thru 2.4 3.0 PA YMENT IN RESPECT OF LONG TERM COMMITMENTS AND LIABILITIES PL 08 73 08 33,859 4.0 SUBTOTAL - DEBT CHARGES Add Lines 1.3,2.5,3.0 1,154,333 i 5.0 DEBT CHARGES FOR MUNICIPAL UTILITIES 5.1 5.2 5.3 Electricity Gas Telephone PL 08 48 02 PL 08 49 02 PL 08 50 02 Arnl'unts Recovered from Unconsolidated Entities 807 I I I I o o o o I I 0: I I o o o , ~ DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT -~ 'I I II I MUNICIPALITY: Clarington T MMAH CODE: 10402 I' 10.0 TOTAL REVENUE FUND REVENUES PL035104 23,139,957 11.0 FEES FOR REPAYING THE PROVINCE FOR DOWNTOWN REVITALIZATION LOANS PL 08 8 I 08 o 12.0 FEES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE PL 07 45 04 14,200 13.0 GRANTS FROM GOVERNMENT OF ONTARIO, GOVERNMENT OF CANADA AND OTHER MUNICIPALITIES 13, I Ontario Grants 13,2 Canada Grants 13.3 Other Municipalities PL 03 69 04 PL 03 30 04 PL 03 31 04 1,827,280 11,087 23,460 13.4 SUBTOTAL Add Lines 14.1 thru 14.3 1,861,827 14.0 REVENUE FROM SALE OF LAND PL 03 49 04 o 15,0 CONTRIBUTIONS FROM C...\P!TAL FUND PL 03 43 04 o 16.0 CONTRIBUTIONS FROM RESERVES AND RESERVE Fl 'JDS PL 03 44 04 983,563 17.0 :'\ET REVENUE FUND REVENUES Line 10.3 less Lines 11,12, 13.4,14,15,16 20,280,367 18.0 25% OF NET REVENUE FUND REVENUE 5,070,092 19.0 A'\:\'UAL REPAYMENT LIMIT 25% of Net Revenue Fund Revenues less Net Debt Charges 4,172,169 FOR ILLUSTRATION PURPOSES ONLY I t the municipality could borrow at 10,5% annually, the annual repayment limit shown in 1'1 above would allow it to undertake additionallong-tenn borrowing as follows: (a) 20 years @ 10.5% p.a. (a) 15 years @ 10,5% p,a. (a) 10 years@ 10,5% p.a. (a) 05 years@ 10.5% p,a. 34,340,741 30.848,284 25,094,647 15,615.836 I ___~___ __ ~___________.__M Pa~e: OJ of OJ Date Prepared: IS.Dec.97 808