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HomeMy WebLinkAboutFSD-001-24Clarftwn Staff Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: General Government Committee Date of Meeting: January 22, 2024 Report Number: FSD-001-24 Submitted By: Trevor Pinn, Deputy CAO, Finance and Technology/Treasurer Reviewed By: File Number: Mary -Anne Dempster, CAO Resolution#:JC-006-24 Report Subject: 2024 Temporary Borrowing By-law Recommendations: By-law Number: 2024-001 1. That Report FSD-001-24, and any related delegations or communication items, be received; 2. That the By-law attached to Report FSD-001-24, as attachment 1, be approved; and 3. That all interested parties listed in Report FSD-001-24, and any delegations be advised of Council's decision. Municipality of Clarington Report FSD-001-24 Report Overview Page 2 The Municipality of Clarington is required to provide a by-law authorizing temporary borrowing as part of its banking arrangements with TD Bank. This by-law is an annual requirement and remains unchanged from prior years. Staff do not anticipate that the Municipality will draw on this credit facility. 1. Background 1.1 Annually, Council is requested to grant authority to the Mayor and Treasurer to borrow, temporarily, funds that may be required to meet current expenditures and liabilities of the Municipality before the receipt of the Municipality's property taxes and other revenues. These borrowings may be in the form of external or internal sources, including inter -fund transactions. 1.2 The legal authority for these borrowings is under Section 407 of the Municipal Act, 2001. It allows municipalities to borrow amounts between January 1 and September 30 not to exceed 50 per cent of total estimated annual revenues and to borrow amounts between October 1 and December 31 not to exceed 25 per cent of total estimated annual revenues. In 2024, the Municipality is able to use the current year's revenues as a calculation because the budget has been passed; in years where the budget is not passed prior to the by-law, the previous year's budget is the limit. 1.3 Consistent with prior years, the request for authority is $15,000,000. Under current regulations, the upper limit would be more than $38,250,000 until September and $19,125,000 from October to December. 1.4 Historically, it has not been necessary for the Mayor and the Treasurer to exercise this authority. Staff do not anticipate utilizing the funds in 2024; however, the adoption of the by-law is a requirement of our banking agreements. 2. Financial Considerations 2.1 The Municipality only pays interest expenses on the amount of funds that are borrowed at any given time. If the Municipality does not borrow funds, there will be no interest expense incurred. 3. Concurrence Not Applicable. Municipality of Clarington Report FSD-001-24 4. Conclusion Page 3 It is respectfully recommended that the temporary borrowing by-law be approved and authority be provided. This authority provides the Municipality with contingency borrowing capacity in the event of unknown circumstances related to collecting the Municipality's revenues. The proposed 2023 limit remains unchanged from 2022. Staff Contact: Trevor Pinn, CPA, CA, Deputy CAO, Finance and Technology/Treasurer, 905- 623-3379 x2602 or tpinn@clarington.net. Attachments: Attachment 1 — Draft By-law to authorize temporary borrowing for the year 2024 Interested Parties: The following interested parties will be notified of Council's decision: • TD Bank Attachment 1 to Report FSD-001-24 If this information is required in an alternate format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. The Corporation of the Municipality of Clarington By-law 2024-XXX Being a by-law to authorize the borrowing of $15,000,000 to meet, until taxes are collected, the current expenditures of the Municipality for the year 2024. Whereas under Section 407 of the Municipal Act, 2001, the Municipality is empowered to borrow for current expenditures from January 1 to September 30, up to 50 per cent and from October 1 to December 31 up to 25 per cent, of the estimate revenues for the year; Now therefore the Council of the Municipality of Clarington enacts as follows: That the Deputy CAO/Treasurer be hereby authorized on behalf of the Municipality to borrow from time to time by way of operating line of credit/overdraft facility, from the Bank holding the Municipality's banking contract, (hereinafter called the "Bank"), a sum or sums not exceeding in the aggregate $15,000,000 to meet until the taxes are collected the current expenditures of the Municipality for the year, including the amounts required for the purposes mentioned in Subsection (1) of Section 407 of the Municipal Act, 2001, with interest at such rate as may be agreed upon from time to time with the Bank under the banking contract. 2. That all sums borrowed pursuant to the authority of this by-law as well as all other sums borrowed in this year and in previous years from the Bank for any or all of the purposes mentioned in the said Section 407, shall with interest thereon, be a charge upon the whole of the revenues of the Municipality for the current year and for all preceding years as and when such revenues are received. 3. That the Deputy CAO/Treasurer is hereby authorized and directed to apply in payment of all sums borrowed as aforesaid, together with interest thereon, all of the monies hereafter collected or received either on account or realized in respect of taxes levied for the current year and preceding years or from any other source which may lawfully be applied for such purpose. 4. That the Deputy CAO/Treasurer is hereby authorized to furnish to the Bank a statement showing the nature and amount of the estimated revenues of the Municipality not yet collected and also showing the total of any amounts borrowed under Section 407 of the Municipal Act, 2001, that have not been repaid. 5. That this by-law shall become effective on the date of passage. Passed in Open Council this th day of January, 2024. Adrian Foster, Mayor June Gallagher, Municipal Clerk