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8. SINKING FUND FINANCIAL STATEMENTS 2008 AND
DISTRIBUTION OF SURPLUS états financiers des fonds
d’amortissement de 2008 et répartition des excédents |
That Council receive the Sinking Fund Financial Statements for 2008 and approve the distribution of the sum of $2,378,163.59 from the City of Ottawa Sinking Fund representing the surplus in excess of the debenture commitment authorized by by-law 126-1989 which matured 31 May 2009, to the City of Ottawa.
Recommandation du Comité
Que le Conseil prenne connaissance des états financiers des fonds d’amortissement de 2008 et approuve la répartition de la somme de 2 378 163,59 $ provenant du Fonds d’amortissement de la Ville d’Ottawa et représentant l’excédent en surplus de l’engagement, autorisé par le Règlement 126-1989, des obligations non garanties, lesquelles sont échues le 31 mai 2009, à la Ville d’Ottawa.
DOCUMENTATION
1.
City Treasurer’s report dated 1 June 2009
(ACS2008-CMR-FIN-0027)
Corporate Services and Economic Development
Committee
Comité des services organisationnels et du développement économique
and Council / et au Conseil
Submitted
by/Soumis par : Marian Simulik,
City Treasurer/ Trésorière municipale
Contact Person/Personne ressource: Gerry Mahoney, Manager Treasury
Finance
Department/Services des finances
(613)
580-2424 x 21310, Gerry.Mahoney@ottawa.ca
SUBJECT:
|
SINKING FUND FINANCIAL STATEMENTS 2008
AND DISTRIBUTION OF SURPLUS |
|
|
|
OBJET :
|
états financiers des fonds d’amortissement de 2008 et répartition des
excédents |
That the Corporate Services and Economic Development Committee recommend Council receive the Sinking Fund Financial Statements for 2008 and approve the distribution of the sum of $2,378,163.59 from the City of Ottawa Sinking Fund representing the surplus in excess of the debenture commitment authorized by by-law 126-1989 which matured 31 May 2009, to the City of Ottawa.
Que le Comité des services organisationnels et du développement économique recommande au Conseil de prendre connaissance des états financiers des fonds d’amortissement de 2008 et d’approuver la répartition de la somme de 2 378 163,59 $ provenant du Fonds d’amortissement de la Ville d’Ottawa et représentant l’excédent en surplus de l’engagement, autorisé par le Règlement 126-1989, des obligations non garanties, lesquelles sont échues le 31 mai 2009, à la Ville d’Ottawa.
When sinking fund or term debentures are issued, an annual contribution is made to the sinking fund, which together with interest earnings derived from the investment of these funds, will accumulate to an amount that will be sufficient to pay the debentures on maturity. Investments are held in the Sinking Fund and are expected to grow to amounts that will be sufficient to meet the principal payments, which are required when the debenture issues mature. When the sinking fund balance for a debenture issue is more than sufficient to pay the principal amount of the debenture issue at the maturity date, this surplus may be distributed to the general fund in accordance with Section 409 of the Ontario Municipal Act, 2001.
The accounts for the sinking fund have been closed and audited for the year ending 31 December 2008. The value of the Sinking Fund portfolio including short-term investments (cash and cash equivalents) as at 31 December 2008 was $194.3 million on an amortized cost basis (the market value was $204.0 million). The portfolio exceeds the actuarial requirements of $178.4 million which is the minimum amount required as at 31 December 2008, to accumulate sufficient funds to meet total sinking fund debentures at maturity. Commitments of $285 million are scheduled to mature from 2009 to 2019.
On 31 May 1989 the former Regional Municipality of Ottawa-Carleton issued debentures in the amount of $50 million for Regional purposes maturing in twenty years with interest at 10.625% as authorized by by-law 126 of 1989. Commencing on 31 May 1990, $1,512,129.36 was deposited annually with the Sinking Fund for the purpose of accumulating sufficient funds to meet the $50 million principal amount when the debenture matures on 31 May 2009. The amount of the annual contribution to the Sinking Fund was reduced to $250,000 commencing 31 May 2005 as approved by Council on 11 May 2005. On 27 June 2007 Council approved the discontinuation of further contributions to the Sinking Fund as the Sinking Fund account for this by-law was expected to be sufficient to meet the debenture commitment on maturity without additional contributions.
As at 31 December 2008, the Sinking Fund account for this by-law accumulated to $52,378,163.59. The debenture matured on 31 May 2009 and $50 million was transferred from the Sinking Fund to the City to meet the debenture commitment. Accordingly, an amount of $2,378,163.59 which exceeds the debenture commitment of $50 million, may be returned to the City without risk of not having sufficient funds to meet the debenture commitment on maturity.
The public consultation process is not applicable.
There are no legal/risk management impediments to implementing the recommendation in this Report.
Sinking Fund levies are budgeted as debt charges until such time as the contribution is reduced or discontinued in accordance with Section 409 of the Ontario Municipal Act. Since the accumulated value of the Sinking Fund Account for by-law 126 of 1989 exceeded the amount required to meet the principal amount due on 31 May 2009, the excess amount of $2,378,163.59 may be returned to the City.
Document 1: Sinking Fund Financial Statements 2008
Document 2 Sinking Fund Earnings by By-law for 2008
Following consideration by Corporate Services and Economic Development Committee, the recommendation will be forwarded to Council for its consideration.
DOCUMENT 2
Table 1:
Sinking Fund Earnings for 2008 ($mil)
|
Maturity Date |
By-law Number |
Opening Balance |
Levies Received |
Earned Interest |
Capitalized Interest |
Surplus To Be Paid |
Closing Balance |
Actuarial Requirement |
Debt Maturity |
|
May 31, 2009 Feb 28, 2011 Apr 15, 2012 Sep 14, 2018 Sep 10, 2019 |
126 of 1989 33 of 1991 81 of 1992 68 of 1998 72 of 1999 |
49.67 86.62 23.75 4.55 12.56 |
0.0 1.00 3.98 1.04 3.21 |
2.71 4.68 1.55 .24 .66 |
2.23 3.85 1.28 .17 .46 |
2.38 - - - - |
50.0 92.293 29.28 5.83 16.43 |
47.53 81.42 28.00 5.62 15.79 |
50.00 100.00 50.00 20.00 65.00 |
|
|
|
177.15 |
9.23 |
9.84 |
7.99 |
2.38 |
193.83 |
178.36 |
285.00 |