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9. FINANCING LEASE AGREEMENTS 2008 Ententes de Financement des baux financiers de 2008
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COMMITTEE RECOMMENDATION
That Council receive this report on outstanding Lease Financing Agreements as at 31 December 2008 as required by Ontario Regulation 653/05 amended to Regulation 604/06 and the City’s Debt and Financing Policy.
RecommandationS 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 2008, 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 5 June 2009
(ACS2008-CMR-FIN-0028)
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/Department Finance
(613) 580-2424 x
21310, Gerry.Mahoney@ottawa.ca
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Ref N°:
ACS2009-CMR-FIN-0028 |
SUBJECT:
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OBJET :
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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 2008, 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 arrangements including the following information:
× estimates of the proportion of the financing leases to the City’s total long-term debt and to provide a description of any changes in that proportion to the previous years report, if any; and
× a statement that in his or her opinion all financing leases were made in accordance with the lease policy and goals as approved by Council.
Accordingly this report is submitted on accordance with Council’s Policy on Debt and Financing.
The following summarizes the significant or material financing lease agreements outstanding at year-end 2008:
Financing
Leases Outstanding
31
December 2008
($000’s)
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Project |
Amount |
Term |
Rate of Interest |
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Office Building |
67,162 |
24 years starting July 2003 |
6.0% |
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Paramedic Services Building |
22,644 |
30 years starting December 2005 |
5.79% |
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Total |
89,806 |
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The total principal amount outstanding under Financing Lease Agreements represents 16.2% of the City’s total net debt including the Public Private Partnership (PPP) debt as at 31 December 2008. For comparison purposes, as at 31 December 2007 the total principal amount outstanding under Financing Lease Agreements represented 17.8% of the total net long-term debt including Public Private Partnership debt. The change in this ratio results from the net long-term debt being higher at year-end 2008 ($553.3M) than 2007 ($469.1M) mostly as a result of the City issuing $133.8M in new debentures during 2008 less debt principal payments and sinking fund contributions of $ 41.9M and net changes to the sinking fund of $7.7M.
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 payments 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 2008.
On 11 April 2007 Council approved entering into a Lease Financing Agreement with Orleans Town Centre Partnership in an amount of approximately $28.7million and a loan guarantee to be repaid over 30 years. Since the lease payments have only started in January 2009, this Lease Financing Agreement is not included in the above table. The interest rate for this Lease Financing Agreement was set at 5.012% semi-annual yield. Interest is accrued 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.
There were no new lease financing arrangements approved by Council during 2008.
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.
There are no legal/risk management
impediments to receiving the information set out in this Report. Further, this information is required to be
provided pursuant to Ontario Regulation 653/05 amended to Regulation 604/06 and
the City's Debt and Financing Policy.
Following consideration by Corporate Services and Economic Development Committee, this report will be forwarded to Council for its consideration.