Item - 2019.EX1.8

The Executive Committee recommends that:  

1.  City Council authorize the Mayor (or as an alternate to the Mayor, either the Deputy Mayor or the Chair of the Budget Committee) and the Chief Financial Officer and Treasurer, during each of the years 2019, 2020, 2021 and 2022, to:

a.  enter into agreements for the sale, or the issuance and sale, of debentures, and revenue bonds and for entering into bank loan agreements, upon such terms and conditions, including price, as they deem expedient, for the purposes of borrowing money to obtain or provide long-term financing of any capital work, in an annual amount not to exceed $1.0 billion per year provided that such debt issue is in compliance with the Council approved debt guidelines as amended from time to time;

b.  enter into any additional agreements necessary to provide for the management of interest rate risk, the management of currency risk or to minimize the costs or risks due to fluctuations in interest rates, all associated with the debentures, revenue bonds, or bank loan agreements upon terms satisfactory to them; and

c.  to reopen an existing debenture issue if it is determined that the reopening will be advantageous to the City, depending upon capital market conditions.

2.  City Council authorize the Chief Financial Officer and Treasurer, during each of the years 2019, 2020, 2021 and 2022, to:

a.  temporarily borrow amounts that the City considers necessary to meet expenses of the City for the year and of prescribed amounts, whether or not they are expenses for the year, that the City requires in the year as set out in the applicable regulation under the City of Toronto Act, 2006 until such time as the taxes are collected and other revenues are received, provided the total amount so borrowed plus the principal amount of any outstanding temporary borrowings together with all accrued interest thereon at any time will not exceed $500 million per year; or

b.  temporarily borrow for capital works pending the issuance of debentures or entering into bank loans, in an amount not to exceed $500 million per year.

3.  City Council authorize the Chief Financial Officer and Treasurer to establish a Promissory Note Program as described in this report as a means of exercising the temporary borrowing authority recommended in Recommendation 2 above, including the authority to enter into any required agreements between the City and the relevant parties in order to facilitate the Promissory Note Program, including dealer agreements, all upon such terms as are satisfactory to the Chief Financial Officer and Treasurer in consultation with the City Solicitor.

4.  City Council amend Municipal Code Chapter 30, Debenture and other Borrowing, to reflect Recommendations 1 and 2 above, and authority be granted for the introduction of the necessary Bills in Council to give effect to City Council's decision.

5.  City Council amend the Financing of Capital Works Policy and Goals to reflect Recommendations 1 and 2 above.

This report requests the delegation of Council's authority to the Mayor (or as an alternate to the Mayor, either the Deputy Mayor or the Chair of the Budget Committee) together with the Chief Financial Officer and Treasurer, in respect of the following long-term borrowing activities for the current term of Council.  This activity includes negotiating and entering into agreements for bank loans and for the sale and issuance of debentures and revenue bonds to provide long-term financing for the City's capital program, up to the recommended annual limits.

Following the City committing to issue the long-term debt through the delegated authority to enter into such a commitment being exercised by the Mayor (or Mayor's Alternate) and the Chief Financial Officer and Treasurer, the Debenture Committee must authorize it. The Committee is comprised of the Mayor, Deputy Mayor, Chair of the Budget Committee, the City Manager and the Chief Financial Officer and Treasurer.  Recognizing that such approvals for long-term debt must be obtained in a timely manner as required by capital market participants, City Council delegated authority to approve debt issuance and to adopt the necessary borrowing by-laws to the Debenture Committee.

In addition, the report requests the delegation of Council's authority to the Chief Financial Officer and Treasurer to negotiate and enter into agreements for bank loans and promissory notes not to exceed 365 days in respect of certain short-term borrowing activities on behalf of the City for the current term of Council.  These activities include:

a. temporary borrowing primarily for operating expenses pending the receipt of annual taxes and other revenues during Council's term, up to the recommended annual limits; and

b. temporary borrowing for approved capital works pending long-term financing, up to the recommended annual limits.

Since 2011, this authority has been delegated by Council for the duration of the Council term, within annual monetary limits. Prior to 2011, the authority was delegated annually. These measures are necessary to support the City's efforts to access the capital markets in an efficient and effective manner so as to achieve its capital and operating requirements.