7. FINANCING LEASE AGREEMENTS 2007 Ententes de Financement des
baux financiers de 2007 |
Committee Recommendation
That Council receive this report on outstanding Lease Financing Agreements, as at 31 December 2007, as required by Ontario Regulation 653-05 amended to Regulation 604/06 and the City’s Debt and Financing Policy. .
Recommandation du comité
Que le Conseil prenne connaissance de ce rapport sur les accords de
financement des baux financiers en suspens en date du 31 décembre 2007, tel
qu’exigé par le Règlement ontarien 653/05, modifié en Règlement 604/06, et par
la politique de la Ville sur les dettes et le financement..
Documentation
1. City
Treasurer’s report
dated 17 July 2008 (ACS2008-CMR-FIN-0027).
Corporate Services and Economic Development
Committee
Comité des services organisationnels et du développement économique
and Council / et au Conseil
17 July 2008 / le 17 juillet 2008
Submitted by/Soumis par : Marian Simulik, City
Treasurer, Trésorière municipale
Contact Person/Personne ressource : Gerry Mahoney, Manager, Treasury /
Trésorerie Gestionnaire,
Financial
Services/Services financiers
(613)
580-2424 x 21310, gerry.mahoney@ottawa.ca
SUBJECT:
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OBJET :
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That the Corporate Services and Economic Development Committee and Council receive this report on outstanding Lease Financing Agreements, as at 31 December 2007, as required by Ontario Regulation 653-05 amended to Regulation 604/06 and the City’s Debt and Financing Policy.
Que le
Comité des services organisationnels et du développement économique et le
Conseil prennent connaissance de ce rapport sur les accords de financement des
baux financiers en suspens en date du 31 décembre 2007, tel qu’exigé par le
Règlement ontarien 653/05, modifié en Règlement 604/06, et par la politique de
la Ville sur les dettes et le financement.
In accordance with Ontario Regulation 653/05 amended
to Regulation 604/06, Council adopted a Policy on Debt and Financing on 11 April
2007. The City Treasurer is required to provide a
report annually to Council on any outstanding lease financing agreements
including the following information:
Accordingly this report is submitted in accordance with
Council's Policy on Debt and Financing.
The following summarizes the significant or material financing lease
agreements outstanding at year-end 2007:
Financing Leases Outstanding
31 December 2007
($000's)
Project |
Amount |
Term |
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Office Building |
68,515 |
6.0% |
|
Paramedic Services Building |
15,153[1] |
5.79% |
|
Total |
83,668 |
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The total principal amount outstanding under Financing Lease
Agreements represents 17.8% of the City's total net debt including Public
Private Partnership (PPP) debt as at 31 December 2007. For comparsison purposes, as at 31 December
2006 the total principal amount outstanding under Financing Lease Agreements
represented 16.4% of total net long-term debt including PPP debt. The change in
this ratio largely results from the net long-term debt being lower at year-end
2007 ($469.1 M) than 2006 ($521.3) as a result of the City not issuing new debenture
debt during 2007. As reported to
Council on 27 February 2008, the City issued $100 million amortizing debentures
in January 2008.
The Policy on Financing and Debt provides for the City Treasurer to
approve non-material leases which are defined as a financing lease in which the
annual payment will be less than $500,000, the term of the lease does not
exceed 10 years and as a class does not exceed 1% of the City's net tax
levy. No non-material leases were approved
by the City Treasurer during 2007.
There was only one new lease financing arrangement approved by
Council during 2007. On 11 April 2007 Council approved entering into a
Lease Financing Agreement with Orleans
Town Centre Partnership in an amount of approximately $28.7 million and a loan
guarantee to be repaid over 30 years.
Since the project is still in the construction phase and the lease
payments have not commenced, the Lease Financing Agreement is not included in
the above table. The transaction closed
on 2 May 2007. The interest rate for the Lease Financing Agreement was set at
5.012% semi-annual yield. Interest
accrues during the construction period with the first monthly blended payment
of principal and interest commencing 2 January 2009 and the final payment due 2
December 2038. Construction of the
Orleans Art Centre is well underway and at this time is expected to be
completed early in 2009.
The public consultation process is not applicable.
It is the opinion of the City Treasurer that the Lease Financing Agreements referred to in this report, comply with the lease policy and goals as outlined in the Policy on Debt and Financing as adopted by Council. Lease payments are budgeted in the annual Operating Budget.
Following consideration by Corporate Services and Economic Development Committee, this report will be forwarded to Council for its consideration.
[1] The amount outstanding reported for this lease will be adjusted for 2008 as noted in the 2007 Audit Results and Communications submitted to Council on 25 June 2008. The amount of capital lease obligations has been understated by approx. $7.8 million.