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Wanda A. Liczyk
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| Chief Financial Officer & Treasurer |
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| Finance
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City Hall, 7th Floor, East Tower
100 Queen Street West
Toronto, ON M5H 2N2
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Tel: 416-392-8773
Fax: 416-397-5236
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January 17, 2000
TO: Policy and Finance Committee
FROM: Chief Financial Officer & Treasurer
SUBJECT: Temporary Borrowing Pending the Receipt of Tax Revenues and the
Issuance of Debentures during 2000
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;
(2) the temporary borrowing limit for capital purposes for 2000 be established at $500,000,000;
(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 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, 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 and the borrowing limit for capital purposes for 2000 be
established at $500,000,000. 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 392-5380, fax 397-4555
Martin Willschick, Manager, Treasury Services 392-8072, fax 397-4555
W. A. Liczyk
Chief Financial Officer & Treasurer
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