STAFF REPORT TO COUNCIL

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Tiffany Skinner
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1 STAFF REPORT TO COUNCIL CORPORATE SERVICES TO: MAYOR AND COUNCIL DATE: April 11, 2011 TO: FROM: SUBJECT: Mayor and Council Sandra Stibrany, Manager Financial Services RCMP New Facility Temporary Financing ATTACHMENTS: Temporary Borrowing Bylaw No Temporary Borrowing Bylaw No Certified copy of General Loan Authorization Bylaw No. 8011, Certified copy of RCMP Building Project Loan Authorization Bylaw No. 8316, Certificate of Approval from the Inspector for Municipalities for Bylaw Certificate of Approval from the Inspector of Municipalities for Bylaw RECOMMENDATIONS: 1. That the staff report be received. 2. That Council give 1 st three readings to Temporary Borrowing Bylaw That Council give 1 st three readings to Temporary Borrowing Bylaw PURPOSE: This report has been prepared to provide information with respect to arranging for the use of temporary borrowing of funds needed for the construction phase of the RCMP Building project. The necessary loan authorization bylaws have been approved by Council and received a certificate of approval from the Inspector of Municipalities as attached to this report. Temporary borrowing bylaws are required in order for the City to arrange for interim financing in advance of a sale of debentures. Council is requested to approve the temporary borrowing bylaws as attached to this report. STRATEGIC PRIORITES: The RCMP new facility is a focus area and a priority project in Council s strategic plan. The use of temporary borrowing during the construction phase of the project has been approved by Council.

Certified copy of RCMP Building Project Loan Authorization Bylaw No. 8316, 2010. Certificate of Approval from the Inspector for Municipalities for Bylaw 8011.

2 POLICY / REGULATORY ANALYIS: The Community Charter section 180 (1) requires that a loan authorization bylaw be approved. Section 181 of the Community Charter provides that Council may borrow temporarily against an approved loan authorization bylaw upon the approval of a temporary borrowing bylaw. FINANCIAL CONSIDERATIONS: The RCMP Building project has a total budget of $38.9 million. The construction costs are estimated to be $10.5 million in 2011 and $21 million in In order to have the cash flow needed to fund the work the City will need to borrow temporarily against the loan authorization bylaws. The temporary financing will be arranged through the Municipal Finance Authority which currently offers an interest rate of 1.7%. Interest based on the principal amount borrowed will be paid monthly and the total cost of interest will be capitalized into the overall project. Once construction of the building is complete, Council will be asked to approve a Security Issue Resolution for the issuance of debentures. The debenture issue will be used to repay the temporary financing. The term of the debentures will be twenty (20) years. OTHER CONSIDERATIONS: The city formed an RCMP Working Group committee in 2010 for the purpose of reviewing all aspects of the RCMP Building project. The group considered four scenarios with respect to debt financing. Scenario 1 use interim financing then issue 30 year debenture, Scenario 2 issue 30 year debenture as required to meet construction costs, Scenario 3 use interim financing then issue 20 year debenture, Scenario 4 issue 20 year debenture as required to meet construction costs. Administration recommended and received Council approval to implement Scenario 3. ALTERNATIVES: None SUMMARY AND CONCLUSION: Council is requested to approve temporary borrowing bylaws for the funds needed to finance the construction of the RCMP Building. Temporary borrowing against the previously approved loan authorization bylaws will be repaid upon completion of the construction and the issuance of the debentures. Interest only payments at a current rate of 1.7% on the temporary funds will be made monthly. Respectfully submitted, Sandra Stibrany, Manager Financial Services 2

FINANCIAL CONSIDERATIONS: The RCMP Building project has a total budget of $38.9 million. The construction costs are estimated to be $10.5 million in 2011 and $21 million in 2012.

POLICY. Effective Date: Approval Level: Policy #: Revision #:

POLICY. Effective Date: Approval Level: Policy #: Revision #: Department: Corporate Services Effective Date: 203-0-0 Division: Financial Services Approval Level: Council Section/Facility: Capital Financing and Debt.0 PURPOSE. This Policy establishes:. The goals that