Kris Dalio, Director of Finance, and Walter Babicz, General Manager of Administrative Services

Transcription

1 DATE: March 7, 2017 TO: NAME AND TITLE: MAYOR AND COUNCIL Kris Dalio, Director of Finance, and Walter Babicz, General Manager of Administrative Services SUBJECT: ATTACHMENT(S): 2017 Loan Authorization Bylaws and Approval of the Electors Options None

2 RECOMMENDATION(S): 1. THAT Council give first threee readings to Mobile Equipment Financing Bylaw No. 8844, THAT an alternative approval process in accordancee with section 86 of the Community Charter be used for the purpose of seeking approval of the electors in relation to Mobile Equipment Financing Bylaw No. 8844, 2017, and that Council direct Administration to return a report setting out recommende ed resolutionss of Council in order to undertake that process. 3. THAT the City of Prince George be authorized under section 175( (1) of the Community Charter to enter into short term financing agreements with the Municipal Finance Authority in the maximumm aggregate amount of $700,000 forr the replacement of mobile and dispatch radio equipment, and that the short term financing be repaid within five years of entering into each agreement. 4. THAT Council give first threee readings to Public Works Yard Development Loan Authorization Bylaw No. 8845, THAT subject to obtaining statutory approval from the Inspector of Municipalities for Public Works Yard Development Loan Authorization Bylaw No. 8845, 2017, an alternative approval process in accordance with section 86 of the Community Charter be used for the purpose of seeking approval of the electors, and that Council direct Administration to return a report setting out recommended resolutions of Council in order to undertake that process. 6. THAT Council give first threee readings to Nechako Riverside Park Loan Authorization Bylaw No. 8846, THAT subject to obtaining statutory approval from the Inspector of Municipalities for Nechako Riverside Park Loan Authorization Bylaw No. 8846, 2017, an alternative approval process in accordance with section 86 of the Community Charter be used for the purpose of seeking approval of the electors, and that Council direct Administration to return a report setting out recommended resolutions of Council in order to undertake that process. 8. THAT Council give first threee readings to Snow Disposal Facility West Bowl Loan Authorization Bylaw No. 8847, THAT subject to obtaining statutory approval from the Inspector of Municipalities for Snow Disposal Facility West Bowl Loan Authorization Bylaw No. 8847, 2017, an alternative approval process in accordance with section 86 of the Community Charter be used for the purpose of seeking approval of the electors, and that Council direct Administration to return a report setting out recommended resolutions of Council in order to undertake that process. 10. THAT Council give first threee readings to Hart Industrial Storm Drainage Treatment Loan Authorization Bylaw No. 8848, THAT subject to obtaining statutory approval from the Inspector of Municipalities for Hart Industrial Storm Drainage Treatment Loan Authorization Bylaw No. 8848, 2017, an alternative approval process in accordance with section 86 of the Community Charter be used for the purpose of seeking approval of the electors, and that Council direct Administration to return a report setting out recommended resolutions of Council in order to undertake thatt process. 2

3 PURPOSE: At the February 1, 2017 regular Council meeting, Council approved the Capital Plan. The purpose of this report is to ask Council to provide required approvals for certain projects that will require Municipal Finance Authority ( MFA ) Debt Funding, and to seek Council s direction regarding obtaining approval of the electors for the loan authorization bylaws. POLICY/REGULATORY ANALYSIS: Section 180 of the Community Charter provides that after giving first three readings to loan authorization bylaws for long term borrowing ( loan terms that exceed five (5) years), Council may not proceed with adoption of the bylaws without first obtaining statutory approval from the Inspector of Municipalities, and without also obtaining approval of the electors. With respect to Mobile Equipment Financing Bylaw No. 8844, 2017, the Municipal Finance Authority (MFA) has a new equipment financing program that replaces their former equipment leasing program. Loans under this borrowing program are available to municipalities under section 175 of the Community Charter. Bylaw No contemplates entering into mobile equipment financing agreements with the MFA under section 175 of the Community Charter. Statutory approval from the Inspector of Municipalities is not required for Bylaw No However, because the proposed loan agreements with the MFA are for terms of more than five (5) years, Bylaw No doess require approval of the electors before Council may consider final reading and adoption of the bylaw. The two options for seeking approval of the electors for the loan authorization bylaws and the mobile equipment financing bylaw, and the process for each option, is described below The mobile and dispatch radio equipment financing agreement is also recommended to proceed under section 175 of the Community Charter. However, no bylaw is required for this financing agreement and because the term of this loan is not more than five (5) years, this loan does not require approval of the electors. STRATEGIC PRIORITIES: The projects detailed below support Sustainable Infrastructure, Sustainable Fiscal Management, Organizational Excellence and Safe Environment. FINANCIAL CONSIDERATION NS: Project Descriptions: Mobile Equipment Replacement The annual replacement and addition of vehicles and capital equipment are financed through the MFA Equipment Financing Program. Through this loan agreement, the City retains ownership of the asset and is charged a low variable interest rate based on the Canadian Dealer Offered Rate with fixed payment schedules. Some advantages of this program as comparedd to the former MFA equipment leasing program include no fees to set up or discharge leases, no taxes on payments, and no penalties or fees for paying out early or making extra principal payments. The interest rate on the Equipment Financing Program as of today is 1.44%. All loan agreements will be for a term no longer than ten years to match the expected service life of the mobile equipment. The annual debt servicing costs for borrowing the full amount of $4,222,330 will be $466,213 to the General Operating Fund over 10 years and assumes an interest rate of 2.00% %. 3

4 Mobile and Dispatch Radio Equipment Systems The mobile radio and dispatch equipment the City uses to maintain communications with crews has exceededd its useful life and needs to be replaced. Administration recommends using the MFA Equipment Financing program to spread the cost of the $700,000 replacement over a 5 year term. The repayment conditions are the same as with mobile equipment financing and this loan will have an estimated annual servicing cost of $147,233, assuming an interest rate of 2.00%. As the term of this loan agreement is not more than five years it falls under the authority of section 175 of the Community Charter and does not need elector assent and does not require a loan authorization bylaw to be adopted. Only a resolution from Council is required, as set out in recommendation 3 above. Public Works Yard Development This project is to integrate the Parks Division into the main Engineering and Public Works building at th t Avenue, where Roads, Fleet, Engineering and Civic Facilities currently reside. This project will also enlarge the existing change oom/washroom facilities to include the Parks outside workers as well as create office space for the Parks administrative staff. The borrowing of the $1,450,000 will result in annual debtt servicing costs of $97,463 to the General Fund over 20 years and assumes an interest rate of 3.00% and a sinking fund rate of 3.00%. Nechako Riverside Park This park is presently undevelopedd and is located along thee Nechako River, directly northeast of Foothills Bridge. The park would be formalized in order to provide safe and comfortable use by the public and to increase riparian habitat values. Project works would include access control, formalized parking, trails, site grading, revegetation and site furnishings. The borrowing of the $630,000 will result in annual debt servicing costss of $42,346 over 20 years to the General Fund and assumes an interest rate of 3.00% and a sinking fund rate of 3.00%. Snow Disposal Facility West Bowl The existing snow dump on the southeast corner of Foothills and 15 th Avenue must be moved due to increasing development pressure. This project includes sitee identification, investigation and preliminary design work. This facility serves areas west of the downtown which accumulate approximately 110,000 tonnes of snow annually. The borrowing of the $2,930,000 will result in annual debtt servicing costs of $196, 942 to the General Fund over 20 years and assumes an interest rate of 3.00% and a sinking fund rate of 3.00%. Hart Industrial Storm Drainage Treatment This project is for a storm detention and treatment facility located near Blueberry Road and Highway 97. Depending on availability of land, the structure may be either an open channel treatment or an enclosed structure. A diversion structure will also need to be developed to divert flow to this treatment facility. Investigations into the water quality of the storm water being discharged into the McMillan Creek Watershed have revealed that it contains compounds that are detrimental to aquatic life. The borrowing of the $1,470,000 will result in annual debtt servicing costs of $98,807 to the General Fund over 20 years and assumes an interest rate of 3.00% and a sinking fund rate of 3.00%. 4

5 Debt Servicing Costs: BC municipalities financial liabilities (e.g. under leases, partnering, and long-term debt agreements) are subject to liability servicing limits. They also require electorr approval if they are: a loan guaranteee or are of a capital nature; and the agreement is for more than five years; or for more than five years if an extension were exercised. A municipality cannot incur a liability that extends beyond the current year if it would cause the municipality s total annual cost of servicing (e. g. lease payments, partnering payments (if they ree of a capital nature), long-term debt principal and interest payments) to exceed the regulated amount. The regulated amount is currently based on 25% of a municipality s controllable revenues such as: property taxes - a deduction is made to revenue received from Major Industry tax revenues for municipalities which are heavily dependent on that class; payments in lieu of taxes; user fees; and unconditional grants. A municipality may only exceed its liability servicing limit with the prior approval of the Inspector of Municipalities in consultation with the MFA. The City relies on debt financing for new infrastructure and for major repair of existing infrastructure. The City enters into capital lease agreements for the purchase of mobile equipment and computer hardware and software. The following table provides the debt capacity and available capacity as determined by the Municipal Liabilities Regulation. Debt Capacity and Available Capacity Municipal Liabilities Regulation ( ) *2016 figures were not available at the time of this report* Year Municipal Liability Servicing Payment Capacity Approximate Revenue Limit Available Principal Borrowing Available 2011 $134,335,837 $33,583,959 $ $13,316,129 $147,956, $133,553,328 $33,388,332 $ $15,591,012 $173,233, $143,685,547 $35,921,387 $ $17,879,4977 $198,661, $152,049,739 $38,012,435 $ $21,591,1255 $239,901, $160,816,299 $40,204,075 $ $24,889,275 $276,547,500 The total amount of all loan authorization bylaws are included in the liability servicing limit regardless of whether the funds have actually been borrowed. OTHER CONSIDERATIONS: Overview of Approval of the Electors Long-term borrowing by local governments (i.e.. loans with a term of more than 5 years) cannot be undertaken without the loan authorization bylaw being approved by the Inspector of Municipalities after the bylaw is given first three readings by the local government. In addition, approval of the electors is required before Council may consider adopting the long term loan authorization bylaw. 5

6 (a) (b) by holding a eferendum to obtain assent of the electors ; or by holding an alternative approval process. The Province has provided a legislative framework for local governments that recognizes that elected officials are democratically elected, autonomous, responsible and accountable. The Province recognizes that elected officials are in the strongest position to weigh the needs off their municipality and to make informed decisions for the benefit of their electors. Accordingly, under the Community Charter, the Province has providedd the option for local governments to seek approval of the electors for long-term loan authorization bylaws in one of two ways: A summary of both the assent of the electors ( referendum) ) process, and the alternative approval process follows. (a) Assent of the Electors through the Referendum Process: Assent of the electors is obtained through a referendum, also known byy other terms such as a vote or plebiscite. A referendum is a voting process that is governed by the Local Government Act, and is similar in many ways to the process for conducting a general local election. In order to conduct a referendum, Council must appoint a Chief Election Officer and Deputy Chief Election Officer who are responsible for the administration and conduct of the referendum. The Chief Election Officer then sets the general voting day for the referendum, which mustt be a Saturday within 80 days of the loan authorization bylaw receiving third reading and approval from the Inspector of Municipalities. In addition, at least two advance voting opportunities must bee held one on the 10 th day before general voting day, and one on the 4 th day before general voting day. Special voting opportunities (e.g. at long term care facilities) and mail ballot voting processes would also be organized by the Chief Election Officer. The ballot for a referendum must be in the form of a question put to the electors that is phrased in a manner such that it may be answered by marking either yes or no. Council must approve of the wording of the question to be printed on the ballot. Wordingg would typically begin with Do you approve Council for the City of Prince George adopting Bylaw No. XXXX, which will authorize Council to borrow A loan authorization bylaw is deemed to have received the assent of the electors if a majority of the votes counted are in favour of the question (i.e. if a majority of voters answer yes ). If a majority of the votes counted are opposed to the question (i.e. if a majority of voters answer no ), then a bylaw for the same purpose may not be submitted to the electors for approval within a period of 6 months, except with the Province s approval. No recent referendums have been conducted by the City. Inn order to estimate the cost of conducting a referendum, it may be useful to refer to the cost of conducting the 2014 general local election, since the processess and requirements of conducting a eferendum are quite similar to that of a local general election. Based on data from the 2014 general local election, the cost of holding a referendum would likely range between $70,000 - $80,000. The largest variable within that range would be the advertising costs, as there would be no opportunity for collaboration with other local governments in regard to sharing those costs. However, fewer notices are required to be published in a referendum as compared to a local general election. Since City staff would be responsible to conduct the referendum, it would mean those resourcess would be diverted during the referendum process. Staff would need to begin planning and organizing a referendum promptly after Council s decision to proceed, given the legislative time frame to hold a referendum. 6

7 If Council directs that assent of the electors for the associated loan authorization bylaws be obtained through a referendum, then Administration will return a report to Council setting out the next steps and further resolutions required from Council in order to undertake that process. (b) Approval of the Electors through the Alternative Approval Process: The alternative to holding a referendum is the alternative approval process, which is governed by the Community Charter equirements. Local governments havee been able to use the alternative approval process for quite some time. The process was previously known as the counter petition method. The alternative approval process involves publication of a notice in a local newspaper once each week for two consecutive weeks. The notice is also posted on the notice board in the first floor foyer of City Hall, and on the City website. As part of the process, Council must make a fair determination of the total number of electors within the City. Typically, the calculation of the number of electors in the City is based on information provided by Elections BC, a non-partisan independent public agency that maintains an up to date list of registered electors. Electors would then be given the opportunity to indicate they are opposed to Council proceeding with adoption of the loan authorization bylaw by signing and submitting an Elector Response Form, the wording of which must be approved by Council. Council would be asked to set a deadline for Elector Response Forms to be submitted. The deadline must be at least 30 days after the second publication of the notice in a newspaper. If the electors are in favour of Council adopting the loan authorization bylaw, then theyy would not have to do anything. If electors are opposed to the bylaw, or they do not want Council to proceed to adopt the bylaw without a referendum being held, then they must express that opinion to the City by signing and submitting an Elector Response Form by the deadline. The alternative approval process allows a long period of time for the opinion of the electors to be expressed (at least 30 days). In the case of a referendum, the electors generally have 12 hours on each of the two advance voting days, and 12 hours on general voting day to cast their vote. The Corporate Officer is responsible for determining and certifying the results of the alternative approval process. If 10% or more of the total number of electors within the City submit valid Elector Response Forms by the deadline, then Council may not proceed with adoption of the bylaw unless approval of the electors is obtained through the assent of the electors process described above. In other words, a referendum would then be required to be held on the matter in order for Council to proceed to adopt the bylaw. The costss of holding an alternativee approval process consist primarily of two notices being published in a local newspaper, and the printing of elector response forms. The advertising costs are approximately $2,000 - $2,500. The cost of printing Elector Response Forms would depend on the number of forms requested by electors. Staff resources needed to administer the alternative approval process are minimal in comparison to the staff resources required to conduct a referendum.. The time period to hold an alternative approval process is approximately 6 weeks from the date that the first notice is published in a newspaper up to the date that the results of the process are certified by the Corporate Officer and reported to Council. 7

8 If Council directs that approval of the electors for the associated loan authorization bylaws be obtained through the alternative approval process, then Administration will return a report to Council setting out the next steps and further resolutions required from Council in order to undertake that process. SUMMARY AND CONCLUSION: If Council wishes to proceed with the debt financed projectss detailed in this report, then it would be in order for Council to pass the recommendations set out above and to select one of the two methods to seek approval of the electors as described above. Administration is recommending the alternative approval process as the preferred method for elector assent. RESPECTFULLY SUBMITTED: Walter Babicz, General Manager of Administrative Servicess Kris Dalio, Director of Finance APPROVED: Kathleen Soltis, City Manager Meeting date: March 27,