HomeMy WebLinkAboutFSD-030-22Staff Report
If this information is required in an alternate accessible format, please contact the Accessibility
Coordinator at 905-623-3379 ext. 2131.
Report To: Council
Date of Meeting: June 20, 2022 Report Number: FSD-030-22
Submitted By:
Reviewed By:
File Number:
Report Subject:
Trevor Pinn, Deputy CAO/Treasurer
Mary-Anne Dempster, CAO Resolution#: C-152-22
By-law Number:
Debenture for Newcastle Community Park
Recommendations:
1.That Report FSD-030-22 and any related delegations or communication items, be
received;
2.That, in accordance with resolution #GG-240-22, up to $3,217,520.39 for the new
Newcastle Community Park, be funded through debenture at the discretion of the
Deputy CAO/Treasurer with repayment to be through development charges as
applicable;
3.That the Deputy CAO/Treasurer is authorized to make application to the Region of
Durham for the necessary debenture, such terms at the discretion of the Deputy
CAO/Treasurer not to exceed 20 years in any single issue; and
4.That all interested parties listed in Report FSD-030-22 and any delegations be
advised of Council's decision.
Municipality of Clarington Page 2
Report FSD-030-22
Report Overview
Debenture financing (debt) is a tool used to fund capital projects. To issue debt for a capital
work, Council must authorize the work to be debt-financed before the work starts. This report
seeks authorization to debenture finance the Newcastle Community Park to ensure that this
option remains available to the Municipality in the future if so required. The authorization is
also required if long-term internal borrowing is utilized, which is the likely requirement.
Debt financing will not likely occur before 2023 as the Region of Durham has already
completed their 2022 debt issuance.
1. Background
1.1 At it's June 6, 2022 General Government Committee meeting, Report FSD-029-22
provided an updated cost for the Newcastle Community Park. Additional funding of
approximately $2.4million was sought for a total of $3.2 million for the park facilities and
amenities, excluding the skateboard park, which is already existing.
1.2 The project is development charge recoverable as it is growth-related and was included
in the Municipality's most recent DC Study. Committee resolved in Resolution #GG-240-
22 to go ahead with the construction contract award and fund the project through
eligible Development Charges Reserve Funds and the Municipal Capital Works Reserve
Fund at the discretion of the Treasurer.
1.3 The Park Development Charges Reserve Fund has an estimated balance of $4.0 million
and commitments of $4.1 million. The Fund continues to receive funding as
development charges are collected, however, there are insufficient funds in that
particular account if all the other commitments come through.
1.4 The Municipality may borrow internally from other reserve funds and repay those
reserve funds over time. If the time is anticipated to be longer than five years, the
Region requires us to prepare a debenture process, even though it is internal (this was
done in 2018).
1.5 The Municipal Act, 2001 restricts the ability to issue debentures and one of the
requirements is that Council authorize the capital work before it starts. The debenture
may occur after the work has begun but the authorization must be before the work
starts.
2. Debenture Funding Option
2.1 To ensure that financing options are preserved, Staff recommend that Council authorize
the Treasurer to apply to the Region of Durham. If the project starts, Council cannot
Municipality of Clarington Page 3
Report FSD-030-22
then provide authorization for debentures. Acting now preserves but does not obligate
the Municipality the ability to debenture for this project.
2.2 There is no requirement that the Treasurer utilize debentures. The next Region of
Durham debenture issuance is anticipated to be in the fall of 2023 ; this would provide a
full year to determine if the applicable DC Reserve Funds could be utilized to fund or
internally borrow from.
2.3 If internal borrowing is used, and the repayment plan is anticipated to be five years
(which could be an option that provides stable cash flow to the reserve funds), an
internal debenture could be utilized, which would still require the same authorization an
external debenture seeks.
2.4 There is no downside to providing this authorization as there is no obligation to proceed
with a debenture. The debenture can be funded through the collection of development
charges, and internal resources can still be utilized if it makes long-term financial sense.
3. Concurrence
Not Applicable.
4. Conclusion
It is respectfully recommended that Council provides authorization to the Treasurer to
seek debenture financing for the Newcastle Community Park.
Staff Contact: Trevor Pinn, CPA, CA, Deputy CAO/Treasurer, 905-623-3379 ext.2602 or
tpinn@clarington.net.
Attachments:
Not Applicable
Interested Parties:
There are no interested parties to be notified of Council's decision.