Report to: General Committee – Finance & Admin.          Date Report Authored: Feb 19, 2010

 

 

SUBJECT:                         Markham District Energy Capital – Gas Tax Funding

PREPARED BY:               Mark Visser, Manager, Financial Strategy & Investments      

 

 

 

RECOMMENDATION:

1)                  THAT the report dated February 19, 2010 entitled “Markham District Energy Capital – Gas Tax Funding” be received.

2)                  THAT Council approve the allocation of $16.0 million of Gas Tax funding to Markham District Energy (MDE)

3)                  THAT the Treasurer be authorized to transfer, as a grant, $16.0 million to Markham District Energy (MDE) when deemed appropriate over the next four years

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

 

 

PURPOSE:

The purpose of this report is to obtain Council’s approval to allocate $16.0 million of Gas Tax revenues to Markham District Energy (MDE).

 

 

BACKGROUND:

At the November 9, 2009 Markham Enterprise Corporation (MEC) Board of Directors meeting Mr. Bruce Ander, President of Markham District Energy (MDE) made a presentation to the board requesting an equity and/or grant contribution from MEC and/or the Town of Markham in the amount of $19.1 million, net of other funding sources. The funding requested would support two projects; 1) The expansion of the existing Markham Centre facility to increase the capacity of the plant ($14.4M, net of other funding sources) 2) The startup of a new district energy facility in East Markham to serve the existing and expanded Markham Stouffville Hospital facility, New Medical Services Building, New East Markham Community Centre & Library, future Fire Station and Woodhaven expansion ($4.7M, net of other funding sources).

 

On December 15, 2009 Barb Cribbett, Treasurer of MEC presented a report to the MEC Board recommending that the equity and/or grant contribution from MDE be referred to the Town of Markham for consideration. The recommendation was approved by the Board at the Dec 15 meeting, and the request to the Town of Markham for an allocation of $19.1 million was forwarded to Town staff to bring forward to Council.

 

OPTIONS/ DISCUSSION:

The December 15 report to the MEC Board of Directors requested a $19.1 million grant from the Town of Markham utilizing the Town’s 2010-2013 Gas Tax funding.

 

In 2006 Council approved a similar grant to MDE utilizing Gas Tax funding, the grant represented approximately 50% of the Town’s gas tax funding or approximately $8 million from a total funding of $16.9 million.

 

The Town is expecting to receive approximately $32.2 million of Gas Tax funding from 2010-2013. Although the MDE has requested $19.1 million of funding from the Town, Town staff recommend funding MDE at a similar 50% level as approved in 2006, or the equivalent of $16.0 million over the next four years (2010-2013). During the 2010 capital budget process $4.0 million or approximately 50% of the Town’s total 2010 Gas Tax funding was identified as a potential transfer to MDE, therefore this proposal will not impact the approved capital budget.  Town staff have discussed the $16 million funding recommendation with MDE staff and MDE has advised that they have alternate financing options for the $3.1 million ($19.1-$16.0 million).

 

FINANCIAL CONSIDERATIONS AND TEMPLATE:

The Town of Markham will receive approximately $32.2 million in Gas Tax revenue over the next four years (2010-2013), as per the Association of Municipality of Ontario (AMO) “Allocation of Federal Gas Tax Revenue for 2010 to 2014” table attached.   Therefore if the Town funds the MDE request at the $16 million level, this would leave the Town $16.2 million for other eligible projects.  

 

The Gas Tax agreement requires that the funding be incremental to the Town’s regular capital programs and that each Gas Tax project must meet the specified funding criteria. Identifying $32.2 million of potential tax funded or life cycle projects that are incremental to the Town’s existing capital programs and also meeting the Gas Tax criteria can be difficult. In addition, selecting a few large dollar value projects apposed to many small dollars value projects will reduce the Town’s administrative requirements of the Gas Tax program. Therefore, Town staff recommend Council approve the allocation of $16.0 million of Gas Tax funding to Markham District Energy (MDE). And that the Treasurer be authorized to transfer, as a grant, $16.0 million to Markham District Energy (MDE) when deemed appropriate over the next four years.

 

 

 

RECOMMENDED

                            BY:    ________________________          ________________________

                                      Joel Lustig, Treasurer                     Andy Taylor, Commissioner of Corporate Services 

 

 

ATTACHMENTS: None