Report to:  General Committee                                             Report Date:  December 10, 2007

SUBJECT:                          By-law to Authorize Temporary Borrowing for 2008

PREPARED BY:               Barb Cribbett, Treasurer

RECOMMENDATION:

THAT a by-law be brought forward for Council approval to authorize the temporary borrowing, if required, of an amount not to exceed $100,782,915 from January 1, 2008 to September 30, 2008 and $50,391,457 from October 1, 2008 to December 31, 2008 to meet the current expenditures of the municipality until taxes are collected and other revenues are received:

AND THAT the Treasurer will report back to Council in advance of borrowing, if temporary borrowing is required:

AND THAT Staff be authorized and directed to do all things necessary to give effect to this resolution.

EXECUTIVE SUMMARY:

Not applicable.

1. Purpose                     2. Background                      3. Discussion                        4. Financial

5. Others (Environmental, Accessibility, Engage 21st, Affected Units)             6. Attachment(s)

PURPOSE:

To obtain Council approval to establish a temporary borrowing credit facility with an upset limit as described above to ensure that the Town is able to meet its financial obligations in 2008 should it be required. It does not exceed legislated upper limits.

BACKGROUND:

Town of Markham cash flows are historically at their lowest at the end of each budget cycle (December 31st) after all Town expenses, and payments to the Region of York and the York Region School Boards have been made. The Municipal Act, 2001 allows for potential short term borrowing that municipalities may require in the early part of the new year, until interim tax bills generate cash flows.  The Town of Markham is required to pass a borrowing by-law each year in order to have an expenditure facility made available to it by their bankers.  In the past the Town has not availed itself of this facility but nevertheless must have a borrowing by-law in place to apply for such an expenditure facility.

Subsection 407(2) of the Municipal Act, 2001 governs the upper limits on the amounts the Town can borrow.  For the period January 1st to September 30th of the year, the Town’s borrowing cannot exceed 50 per cent of the total estimated revenues of the municipality, and from October 1st to December 31st, 25 per cent of the total estimated revenues of the municipality.

OPTIONS/ DISCUSSION:

Not applicable.

FINANCIAL CONSIDERATIONS AND TEMPLATE: (external link)

The Town would be required to pay interest on any short term borrowing.  Currently, the Town does not budget for interest expense, as borrowing has not been required in the past.

The Treasurer will report to Council prior to borrowing, if it appears that short-term borrowing is required.

ENVIRONMENTAL CONSIDERATIONS:

Not applicable.

ACCESSIBILITY CONSIDERATIONS:

Not applicable.

ENGAGE 21ST CONSIDERATIONS:

Not applicable.

BUSINESS UNITS CONSULTED AND AFFECTED:

Legal Services Department.

RECOMMENDED

BY:    ________________________          ________________________

Barb Cribbett, Treasurer                     Andy Taylor, Commissioner,

Corporate Services

ATTACHMENTS:

Appendix A, “2008 Temporary Borrowing Bylaw”

Q:\Finance\SHARED\2007 General Committee Finance\0750 2008 Temporary Borrowing and by-law.doc

APPENDIX  A: 2008 Temporary Borrowing Bylaw

By-law to authorize temporary borrowing to meet the expenditures of the Town of Markham until taxes are collected and other revenues received.

A by-law to authorize the temporary borrowing of an amount not to exceed $100,782,915 from January 1st to September 30th, 2008 and $50,391,457 from October 1st to December 31st, 2008 to meet the current expenditures of the Corporation for the year, until taxes are collected and other revenues received.

WHEREAS Section 407 (1) of The Municipal Act authorizes that Council may borrow from time to time such sums as Council considers necessary to meet, until the taxes are collected and other revenues received, the current expenditures of the Corporation for the year;

AND WHEREAS Section 407 (2) of The Municipal Act states the amount to be borrowed shall not exceed from January 1st to September 30th of the year, 50 per cent of the total estimated revenues of the Corporation, and from October 1st to December 31st, 25 per cent of the total estimated revenues for the Corporation;

AND WHEREAS Section 407 (3) of The Municipal Act states that until the budget is adopted in a year, the limits upon borrowing shall temporarily be calculated using the estimated revenues of the municipality set out in the budget adopted for the previous year;

AND WHEREAS the total revenues for 2008 have not as yet been adopted;

AND WHEREAS the estimated revenues of the Corporation set forth for the year 2008 are $201,565,830 and estimated revenues for 2008 will approximate 2007;

NOW THEREFORE THE CORPORATION OF THE TOWN OF MARKHAM HEREBY ENACTS AS FOLLOWS:

1.      The Treasurer is hereby authorized on behalf of the Municipality to borrow from time to time by way of promissory note from the Municipality’s banker a sum or sums not exceeding from January 1st to September 30th of the year $100,782,915 and from October 1st to December 31st $50,391,457 to meet, until the taxes and other revenues are received, the current expenditures of the Municipality for the year, including the amount required for the purposes mentioned in Subsection 1 of Section 407 of The Municipal Act and to give on behalf of the Municipality to the Bank a promissory note or notes sealed with the Corporate Seal and signed by the Treasurer for the monies so borrowed, with interest, which may be paid in advance or otherwise.

2.      All sums borrowed pursuant to the authority of this by-law from the said bank for any or all purposes mentioned in the said Section 407 shall with interest thereon, be a charge upon the whole of the revenues of the Municipality for the current year.

READ A FIRST, SECOND, AND THIRD TIME AND PASSED THIS

DAY OF                                      2007.

______________________________                        __________________________

SHEILA BIRRELL                                                      FRANK SCARPITTI, MAYOR

TOWN CLERK