Print Back to Calendar Return
RFD- 3469 Bylaws   Item #   9. a.    
Regular Council Meeting Agenda
Meeting Date: 12/10/2018  
Title:    C-1058-18 - Third 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

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 third reading be given to Bylaw C-1058-18 - Operating Line of Credit Borrowing Bylaw.

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.
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.
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.
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.

During the First and Second Reading of the Bylaw, there was a question from a Council member about authority for accessing the line of credit. Under Section 3.2 of the proposed bylaw, it is specified that the authority for determining whether to access the revolving line of credit rests with Council; “That the City may borrow from the Bank …a sum or sums …shall not exceed the principal amount of five million dollars ($5,000,000), which the Council deems necessary for the purpose of meeting current annual operating expenditures and obligations of the City for each of the fiscal years over the Borrowing Period…”. However, the execution of borrowing is delegated to the Mayor and City Manager under Section 3.6: “The Mayor and City Manager of the City are hereby authorized to execute and deliver to the Bank, for and on behalf of the City, such account authorities, instruments and agreements, including credit agreements, as may be required by the Bank for the City to avail and evidence the City’s $5,000,000 Revolving Operating Line of Credit …”  
C-1058-18 , Operating Line of Credit Borrowing Bylaw

City Council and Committee of the Whole agendas and minutes are posted on the City of Spruce Grove website for information purposes only. These agendas may be changed at the discretion of Council by the addition or deletion of items. Anyone reviewing the draft agenda should do so on the understanding that it is subject to change by Council.

All attachments are in PDF format, and require the Adobe Acrobat Reader plug-in for viewing.

Audio from the most recent City Council and Committee of the Whole meetings are available via podcast on the City of Spruce Grove website.

AgendaQuick©2005 - 2019 Destiny Software Inc., All Rights Reserved