Report to: General Committee Report Date: March 29, 2010

SUBJECT: Municipal Funding Agreement for Gas Tax Allocation

PREPARED BY: Raj Raman, Acting Director Financial Reporting, Ext. 2013

Kishor Soneji, Senior Accountant, Ext. 2681

RECOMMENDATION:

1. That the report dated March 29, 2010 entitled “Municipal Funding Agreement for Federal Gas Tax Allocation” be received;
2. AND THAT a By-Law be enacted granting authority to the Mayor and Clerk to sign the “Amending Municipal Funding Agreement” between the Town of Markham and the Association of Municipalities of Ontario (AMO);
3. 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:

The purpose of this report is to summarize the changes to the 2005 Municipal Funding Agreement (MFA) between the Town and AMO and to enact a By-Law granting authority to the Mayor and Clerk to execute the agreement.

BACKGROUND:

On November 21, 2005 the report entitled “Municipal Funding Agreement for Gas Tax Allocation” was presented to General Committee which included detailed information on various MFA clauses. The MFA signed in 2005 is attached herewith as Appendix A.

AMO recently provided the Town with the Amending MFA which is attached as Appendix B.

The requirements of the 2005 MFA and the Amending MFA as it relates to eligible project categories, eligible costs and expenditure reporting requirements remain the same except for the following changes:

1. Municipal Audit Requirements - The procedure now depends on how funds were used in a particular year:

1. If funds were applied to eligible costs for eligible projects, municipalities are required to submit an annual audit statement. (there is no change to this requirement from the previous agreement)

2. If gas tax funds were not used during the municipal fiscal year, the Treasurer of the municipality is now required to submit a signed Treasurer’s certificate. The Treasurer’s Certificate will verify that activity under the Gas Tax Fund for a particular year has met the terms and conditions of the MFA. In particular, it verifies that activity related to the receipt of funds from AMO, the carry-over of funds and the ownership of municipal infrastructure funded by the gas tax fund program has occurred within the terms and conditions of MFA.

2. Retention of Receipts - Municipalities are now required to retain receipts, invoices and supporting records of payments related to eligible cost of gas tax funded projects according to the timelines outlined by their municipal records retention by-law. For the Town the retention period is six years. The previous agreement necessitated retention of records up to 2018.

3. The amendment has also updated all timelines related to the extension and includes a 2010-2014 Schedule of Funds Payments.

DISCUSSION:

To initiate the transfer of Federal Gas Tax revenues, the Town must enact a By-Law authorizing the execution of the MFA and send a copy of the By-Law along with the signed and sealed Amending MFA to the AMO, as attached in Appendix B.

Staff recommends the Town enact a By-Law granting authority to the Mayor and Clerk to sign the “Amending Municipal Funding Agreement” between the Town and AMO, and that Mayor and Clerk execute the Municipal Funding Agreement allowing the transfer of the Federal Gas Tax Revenues to the Town.

FINANCIAL CONSIDERTATIONS:

The Town received gas tax funding in the amount of $16.9 million during the period 2005-2009 from AMO and the funding has been allocated to eligible projects.

Upon execution of Amending MFA, the Town will receive $32.1 million as gas tax funding for the years 2010-2013. The details are as follows:

Schedule of Gas Tax Fund Payments
Year	Schedule of Payments
	July 15th	November 15th	Yearly Total
2010	$4,011,875.89	$4,011,875.89	$8,023,751.78
2011	$4,011,875.89	$4,011,875.89	$8,023,751.78
2012	$4,011,875.89	$4,011,875.89	$8,023,751.78
2013	$4,011,875.89	$4,011,875.89	$8,023,751.78
Total	$16,047,503.56	$16,047,503.56	$32,095,007.12

Council has already approved $16.0 million of gas tax funding to Markham District Energy to fund their various eligible projects.

The 2010 Capital Budget included over $4.0 million in the gas tax funded projects. Staff will identify gas tax funded projects in 2011-2013 during the appropriate budget processes.

FINANCIAL TEMPLATE: (external link)

No financial implications are considered in this report

ATTACHMENTS:

Appendix A – 2005 Municipal Funding Agreement

Appendix B – 2010 Amending Municipal Funding Agreement