Temporary Borrowing Pending the Receipt of
Tax Revenues and the Issuance of Debentures During 2000The Policy and Finance Committee recommends the adoption of the following report (December 23, 1999) from the
Chief Financial Officer and Treasurer:
Purpose:
To provide authority to temporarily borrow funds, if required, pending the receipt of tax revenues and the issuance and sale
of debentures during 2000.
Funding Sources, Financial Implications and Impact Statement:
An estimate of related costs incurred due to temporary borrowing during 2000 and debt charges resulting from any new
issuance will be included in the 2000 Operating Budget.
Recommendations:
It is recommended that:
(1)the temporary borrowing limit to meet 2000 current expenditures, pending receipt of tax levies and other revenues, be
established at $1,000,000,000.00;
(2)the temporary borrowing limit for capital purposes for 2000 be established at $500,000,000.00;
(3)authority be granted for the introduction of the necessary Bills in Council to give effect to the foregoing; and
(4)the appropriate City of Toronto officials be authorized to take the necessary actions to give effect thereto.
Background:
Subsection 187(1) of the Municipal Act provides that a municipal council may by by-law authorize the Head of Council and
the Treasurer of the municipality to borrow from time to time by way of promissory note or bankers' acceptance such sums
as the council may deem necessary to meet, until the taxes are collected and other revenues for the current year are
received, the current expenditures of the corporation. The City may also undertake temporary borrowing, under individual
project approvals, for capital projects pending the issuance of debentures.
Discussion:
The amount of temporary borrowing outstanding at any one time is generally limited by the Municipal Act, unless
otherwise approved by the Ontario Municipal Board, to 50 per cent of estimated annual revenues from January 1 to
September 30 and to 25 per cent thereafter. Until the current year's estimates are adopted, the limitation may be calculated
upon the revenues set forth in the estimates adopted in the previous year. Based upon forecasted current requirements for
2000, it is proposed that a limit of $1,000,000,000.00 be established which is less than the allowable limit under legislation
but is projected to be sufficient to provide the necessary flexibility for the operation of the City=s cash management and
temporary borrowing program during 2000.
Furthermore, under Section 188(1) of the Municipal Act, temporary borrowing is allowable pending the issuance of
debentures by the City for capital purposes as well as for boards of education. The $500,000,000.00, contained in
recommendation (2) of this report is based upon the forecasted 2000 capital financing requirements of the City and the
Toronto District School Board (TDSB).
Temporary borrowing costs incurred on behalf of the TDSB are recovered from that organization.
Conclusion:
It is proposed that the City of Toronto=s 2000 temporary borrowing limit for current purposes be established at
$1,000,000,000.00 and the borrowing limit for capital purposes for 2000 be established at $500,000,000.00. These limits
will provide flexibility for the City=s cashflow, investment and debt management programs while remaining significantly
lower than the requirements of the Municipal Act and the City of Toronto Act, 1997, (No. 2).
Contact Names and Telephone Numbers:
Len Brittain, Director, Treasury and Financial Services, Tel: 392-5380, Fax: 397-4555.
Martin Willschick, Manager, Treasury Services,Tel: 392-8072, Fax: 397-4555.
