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RFD- 3458 Bylaws   Item #   9. c.    
Regular Council Meeting Agenda
Meeting Date: 11/26/2018  
Title:    C-1058-18 - First and Second Reading - Operating Line of Credit Borrowing Bylaw - Pungur-Buick
Department: Corporate Services  
Strategic Vision Element: This topic relates to all three of the City’s strategic vision elements contained in Council’s Strategic Plan Related Goal: n/a

Information
Request for Decision Summary
The City allows for temporary borrowing from time to time up to $5,000,000. The term of the existing Operating Line Borrowing Bylaw will expire on December 31, 2018.

A revolving credit facility is commonly used by many municipalities. A credit facility has been negotiated with CIBC, subject to Council's approval of this Operating Line of Credit Borrowing Bylaw.
Proposed Motion
That first reading be given to Bylaw C-1058-18 - Operating Line of Credit Borrowing Bylaw.

That second reading be given to Bylaw C-1058-18 - Operating Line of Credit Borrowing Bylaw.
Background/Analysis
Historically, grant funding and accumulated surplus amounts have been available before the City needed to pay for the related capital projects. This lag between collecting and using the funding resulted in the City holding a large amount of cash throughout the year. In the last few years, the City has increased the efficiency of financial planning and project timing to utilize funding earlier. As a result, cash balances have decreased.

The City manages its cash by using a general bank account to deposit receipts and disburse payments. The general bank account is interest bearing and the cash that is not required to cover immediate expenditures is invested to earn a higher rate of interest. Cash and investment balances are monitored carefully and the City works to maximize interest revenue using very secure and liquid investment accounts.

Current cash and investment balances remain adequate for City operations. However, the cash balance fluctuates greatly throughout the fiscal year, peaking in July and reaching lower levels from December to March. It would be prudent to secure a credit facility to temporarily borrow from time to time, particularly when the rate of interest charged on the temporary borrowing is less than that earned on investments.
Options/Alternatives
Council gives all three readings to Bylaw C-1058-18 - Operating Line of Credit Borrowing Bylaw.
Consultation/Engagement
The Municipal Government Act sets out parameters for temporary borrowing.

 
Operating expenditures
 
256(1) This section applies to a borrowing made for the purpose of financing operating expenditures.

(2) The amount to be borrowed, together with the unpaid principal of other borrowings made for the purpose of financing operating expenditures, must not exceed the amount the municipality estimates will be raised in taxes in the year the borrowing is made.

(3) A borrowing bylaw that authorizes the borrowing does not have to be advertised if the term of the borrowing does not exceed 3 years.

 

Temporary borrowing is outside of the Debt Management Policy which deals with long term debt. The credit facility is reported separately from the debt limit calculations as defined by provincial legislation. The terms and interest rates of the revolving credit facility will be disclosed annually in the audited financial statements.
 
Implementation/Communication
Statutory advertising normally required for borrowing bylaws is not required for borrowing that is to be used for operating expenditures provided the term of the temporary borrowing bylaw does not exceed three years.

The existing Operating Line Borrowing Bylaw will be repealed at third reading of the new borrowing bylaw.
Impacts
A temporary borrowing bylaw has a maximum term of three years. To ensure that a temporary borrowing bylaw is always in effect a new bylaw will be presented prior to December 31, 2021.
Attachments
C-1058-18 , Operating Line of Credit Borrowing Bylaw

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