9.       DISTRIBUTION OF SINKING FUND SURPLUS AND SINKING FUND LEVIES FOR 2011

 

DISTRIBUTION DE L’EXCÉDENT Du FONDS D’AMORTISSEMENT ET des REDEVANCES relatives aU FONDS D’AMORTISSEMENT POUR 2011

 

 

COMMITTEE RECOMMENDATIONS

 

That Council:

 

1.      Approve the distribution in the amount of $4,438,026 from the City of Ottawa Sinking Fund to the City representing the surplus in excess of the debenture commitment authorized by By-law 33 of 1991 which matures on February 28, 2011 and that this amount be contributed to the Environmental Resources Areas Acquisition Reserve Fund;

 

2.      Approve any future excess amounts which Council authorizes to be distributed from the City of Ottawa Sinking Fund  be contributed to the Environmental Resources Areas Acquisition Reserve Fund; and

 

3.      Receive this report on the sinking fund levies for 2011, for information.

 

 

RecommandationS du ComitÉ

 

Que le Conseil:

 

1.      approuve que soit remis le montant de 4 438 026 $ provenant du Fonds d’amortissement de la Ville d’Ottawa à la Ville, représentant l’excédent dépassant la débenture autorisée par le Règlement 33 de 1991 et venant à échéance le 28 février 2011, et que ce montant soit alloué au Fonds de réserve municipal d'acquisition de zones de ressources environnementales;

 

2.      approuve que tout futur montant excédentaire provenant du Fonds d’amortissement de la Ville d’Ottawa dont le Conseil autorise la remise soit versé au Fonds municipal d'acquisition de zones de ressources environnementales; et

 

3.      prenne connaissance du présent rapport sur les redevances relatives au Fonds d’amortissement  pour 2011.

 

 

DOCUMENTATION

 

1.      City Treasurer’s report dated 18 February 2011 (ACS2011-CMR-FIN-0012).

 

2.      Extract of Draft Minutes dated 1 March 2011.

Report to/Rapport au :

 

Finance and Economic Development Committee

Comité des finances et du développement économique

 

and Council / et au Conseil

 

18 February 2011 / le 18 février 2011

 

Submitted by/Soumis par : Marian Simulik, City Treasurer/Trésorière municipale

 

Contact Person/Personne ressource : Mona Monkman, Deputy City Treasurer Corporate Finance/ Trésorière municipale adjointe-Finances municipales

Finance Department/ Service des finances

613-580-2424 ext./poste 41723,Mona.Monkman@ottawa.ca

 

City Wide/à l'échelle de la Ville

Ref N°: ACS2011-CMR-FIN-0012

 

 

SUBJECT:

DISTRIBUTION OF SINKING FUND SURPLUS AND SINKING FUND LEVIES FOR 2011

 

 

OBJET :

DISTRIBUTION DE L’EXCÉDENT Du FONDS D’AMORTISSEMENT ET des REDEVANCES relatives aU FONDS D’AMORTISSEMENT POUR 2011

 

 

REPORT RECOMMENDATIONS

 

That the Finance and Economic Development Committee recommend Council approve:

 

1.      The distribution in the amount of $4,438,026 from the City of Ottawa Sinking Fund to the City representing the surplus in excess of the debenture commitment authorized by By-law 33 of 1991 which matures on February 28, 2011 and that this amount be contributed to the Environmental Resources Areas Acquisition Reserve Fund;

 

2.      Any future excess amounts which Council authorizes to be distributed from the City of Ottawa Sinking Fund  be contributed to the Environmental Resources Areas Acquisition Reserve Fund; and

 

3.      Council receive this report on the sinking fund levies for 2011, for information.

 

 

RECOMMANDATIONS DU RAPPORT

 

Que le Comité des finances et du développement économique recommande au Conseil  d’approuver :

1.      Que soit remis le montant de 4 438 026 $ provenant du Fonds d’amortissement de la Ville d’Ottawa à la Ville, représentant l’excédent dépassant la débenture autorisée par le Règlement 33 de 1991 et venant à échéance le 28 février 2011, et que ce montant soit alloué au Fonds de réserve municipal d'acquisition de zones de ressources environnementales;

 

2.      Que tout futur montant excédentaire provenant du Fonds d’amortissement de la Ville d’Ottawa dont le Conseil autorise la remise soit versé au Fonds municipal d'acquisition de zones de ressources environnementales; et

 

3.      Que le Conseil prenne connaissance du présent rapport sur les redevances relatives au Fonds d’amortissement  pour 2011.

 

 

BACKGROUND

 

When the City issues sinking fund debentures, annual contributions are made to the Sinking Fund, which together with interest earnings derived from the investment of these funds 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 which 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.

 

In accordance with subsection 424(4) of the Municipal Act, 2001 the City Treasurer is required to prepare and submit to Council in each year, a statement showing the sums that Council will be required, by by-law, to raise for sinking funds in that year.  A report on the sinking fund earnings for the year including the balance of each sinking fund account is provided to Council annually once the accounts have been closed and the financial statements for the sinking fund have been prepared and the audit has been completed.

 

On December 15, 2010 Council passed the following motion:

 

WHEREAS it is an objective of Council to be able to purchase Urban Natural Features to ensure their continued protection;

 

AND WHEREAS there is at this time no uncommitted funds in the Environmental Lands Reserve, which would be used to purchase these Urban Natural Features;

 

AND WHEREAS has established a policy for the allocation of surplus funds at year at year end;

 

AND WHEREAS where year end funds are available, it is appropriate to make a contribution to the Environmental Lands Reserve;

THEREFORE BE IT RESOLVED THAT the Council refer to the Finance and Economic Development Committee the policy on the disposition on year end surpluses and direct, following the submission of a report from staff, that the Committee provide recommendations to Council for an allocation of year end surplus funds to the Environmental Lands Reserve and the Tree Planting Capital Fund.

 

 

 ANALYSIS

 

By-Law 33 of 1991

 

On February 28, 1991 the former Regional Municipality of Ottawa Carleton issued debentures in the amount of $100,000,000 on behalf of the former City of Ottawa and for Regional purposes. In accordance with this by-law the amount of $3,024,258 was contributed each year to the Sinking Fund in order to accumulate sufficient funds to meet the amount of the debenture maturity on February 28, 2011.  This levy was reduced to $2,000,000 commencing February 28, 2006 and was further reduced to $1,000,000 on February 28, 2008 as approved by City Council.

 

As at December 31, 2010 the sinking fund account for by-law 33 of 1991 had accumulated a balance of $104,438,026.   Therefore the excess amount not required to meet the debenture commitment of $100,000,000 may be returned to the City.

 

The last sinking fund levy in the amount $1,000,000 will be made on February 28, 2011, prior to Council adoption of this report.   In addition, interest earnings for 2011 will be attributed to the sinking fund account for By-law 33 of 1991 up to February 28, 2011 which will result in a surplus for 2011 and will be distributed in 2012.

 

Distribution of Sinking Fund Surplus to the Environmental Resource Areas Acquisition Reserve Fund

 

Council’s motion of December 15 asks that staff review policies on the disposition of year end surplus in order to provide for an allocation of year end surplus funds to the Environmental Lands Reserve and the Tree Planting Capital fund.

 

Each year, staff  prepare a report for Council that identifies the year end surplus or deficit for the prior year and disposes of these surpluses in accordance with existing City bylaws.  The report for the 2010 year end will be submitted to Committee and Council in April of 2011. 

 

In advance of that report, staff are now able to identify surplus in the City’s sinking fund that are available to satisfy Council’s motion.  Sinking fund surpluses do not form part of the year end surplus reporting of departmental operations and this item is over and above surpluses generated from operating activities. Since these funds were raised for capital purposes, it is appropriate to return them to a source that will be available to fund capital expenditures.

 

In accordance with Council direction, it is recommended that the 2010 Sinking Fund surplus be contributed to Environmental Resource Areas Acquisition Reserve Fund.  Staff are also recommending that any future year excess amounts in the Sinking Fund be contributed to this reserve fund.

 

By-law2003-491 which established this reserve allows Council to allocate funds to the reserve from pay-as-you-go contributions, subsidies from other levels of government, interest earnings and any allocation from such other sources of revenue as may be determined by Council.  The by-law stipulates that funds in the reserve fund shall be used for the following purposes:

 

 (a) funding the acquisition of land for forestry or recreational purposes in the natural environment areas designated in the City’s Official Plan; and

(b) for such other purposes as may be approved by the Council of the City of Ottawa.

 

Should Committee and Council accept the recommendations in this report, staff will prepare a report to identify any changes that would be made to the by-law provisions that govern the source and use of funds.

 

Sinking Fund Levies

 

The following is a statement of the sinking fund requirements for 2011:

 

Debenture By-law

Sinking Fund Amounts

 

      $

    33-1991

1,000,000

    81-1992

3,975,229

    68-1998

1,036,501

    72-1999

3,210,575

 

9,222,305

 

In accordance with provisions of the debenture by-laws, the sinking fund amounts will be levied as follows: 

 

Purposes

Sinking Fund Amounts

 

$

Tax Supported

7,388,285

Rate Supported

1,776,141

Development Charges         

57,879

 

9,222,305

 

This statement is submitted for Council for its information in accordance with existing legislation. 

 

 

RURAL IMPLICATIONS

 

There are no rural implications.

 

CONSULTATION

 

This is an administrative matter that does not require public consultation.

 

 

LEGAL/RISK MANAGEMENT IMPLICATIONS

 

There are no legal/risk management impediments to implementing the recommendations in, and receiving, this report.

 

 

FINANCIAL IMPLICATIONS

 

Debt charge budgets for the City provide for the payment of sinking fund levies.  Since the payment of these levies has been approved by by-law, future debt charge budgets must provide sufficient amounts to cover these levies.

 

Since the accumulated value of the Sinking Fund account for By-law 33 of 1991 exceeds the amount required to meet the debenture commitment on maturity, the excess amount may be distributed.

 

 

SUPPORTING DOCUMENTATION

 

Not applicable.

 

 

DISPOSITION

 

Following consideration by Finance and Economic Development Committee, this report will be forwarded to Council for its consideration.

 


DISTRIBUTION OF SINKING FUND SURPLUS AND SINKING FUND LEVIES FOR 2011

DISTRIBUTION DE L’EXCÉDENT Du FONDS D’AMORTISSEMENT ET des REDEVANCES relatives aU FONDS D’AMORTISSEMENT POUR 2011

ACS2011-CMR-FIN-0012                            city-wide / À l’Échelle de la ville

 

Mayor Watson drew Members’ attention to the fact that Councillor McRae had brought forward a motion directing that year-end surpluses would go into an environmental land reserve fund, which Councillor Clark had amended to include trees.  He noted the current report was a staff recommendation that was taking $4.4M from the sinking fund and putting it into the reserve fund so with Council’s approval, the City could move ahead and start its first reserve fund for environmentally sensitive land and trees.

 

Responding to a question from Councillor Hubley, Mayor Watson confirmed that each year, such transfers would have to come to the Finance and Economic Development Committee and Council for approval. 

 

Following these exchanges, Committee voted to approve the report recommendations.

 

That the Finance and Economic Development Committee recommend Council approve:

 

1.      The distribution in the amount of $4,438,026 from the City of Ottawa Sinking Fund to the City representing the surplus in excess of the debenture commitment authorized by By-law 33 of 1991 which matures on February 28, 2011 and that this amount be contributed to the Environmental Resources Areas Acquisition Reserve Fund;

 

2.      Any future excess amounts which Council authorizes to be distributed from the City of Ottawa Sinking Fund  be contributed to the Environmental Resources Areas Acquisition Reserve Fund, and; and

 

3.      Council receive this report on the sinking fund levies for 2011, for information.

 

                                                                                                      CARRIED