DATE: March 16, 2015 TO: His Worship the Mayor, Members of Council FROM: Jeff Ward, City Treasurer RE: 2015 Borrowing Specifications RECOMMENDATIONS That the City Treasurer and City Clerk be authorized to execute the required financial documents to borrow $5 million for the 2015 General Capital Program. BACKGROUND AND DISCUSSION City Council, at its meeting held on January 26, 2015 considered a report in relation to external financing/borrowing for the 2015 General Capital Program. City Council delegated authority to the City Treasurer to negotiate financing terms on the issuance of debt in the amount of $5 million. The City Treasurer also committed to providing a brief report on the terms of the required financing. Negotiations are complete with The City’s financial institution and the following terms have been agreed to pending Council decision.. The $5 million loan will be amortized over 15 years and will have a locked in annual interest rate of 3.32%. In 2015, an interest only payment of $55,333.33 will be paid in August. It is assumed the required time frame of the draw will be April 30, 2015. _____________________________________________________________ Efficiency, Effectiveness, Excellence The amortization table is as follows: Periods Close Date 0.58 1.58 2.58 3.58 4.58 5.58 6.58 7.58 8.58 9.58 10.58 11.58 12.58 13.58 14.58 15.58 Period Ending 30-Apr-15 31-Aug-15 31-Aug-16 31-Aug-17 31-Aug-18 31-Aug-19 31-Aug-20 31-Aug-21 31-Aug-22 31-Aug-23 31-Aug-24 31-Aug-25 31-Aug-26 31-Aug-27 31-Aug-28 31-Aug-29 31-Aug-30 Beginning Balance 5,000,000.00 5,000,000.00 5,000,000.00 4,737,413.30 4,466,108.72 4,185,796.82 3,896,178.57 3,596,945.00 3,287,776.87 2,968,344.36 2,638,306.69 2,297,311.77 1,944,995.81 1,580,982.97 1,204,884.90 816,300.38 414,814.85 Interest Payment 55,333.33 166,000.00 157,282.12 148,274.81 138,968.45 129,353.13 119,418.57 109,154.19 98,549.03 87,591.78 76,270.75 64,573.86 52,488.63 40,002.18 27,101.17 13,771.85 Principal Payment 262,586.70 271,304.58 280,311.89 289,618.25 299,233.57 309,168.13 319,432.51 330,037.67 340,994.92 352,315.95 364,012.84 376,098.07 388,584.52 401,485.53 414,814.85 Total Payment 55,333.33 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 428,586.70 Period End Balance 5,000,000.00 4,737,413.30 4,466,108.72 4,185,796.82 3,896,178.57 3,596,945.00 3,287,776.87 2,968,344.36 2,638,306.69 2,297,311.77 1,944,995.81 1,580,982.97 1,204,884.90 816,300.38 414,814.85 (0.00) In order for the City to proceed with the financing, City Council must pass a borrowing bylaw and provide a copy to the bank. RECOMMENDATION IMPLICATIONS Financial The debt issuance was approved by City Council in January 2015. Financing is required in order to carry out the 2015 General Capital Program. Should there be a surplus in this program for 2015, City Council will be presented with options for using the surplus. Policy and/or Strategic Negotiations were done in good faith based on the Council directive. Failure to follow through on the agreed to terms may negatively impact the City’s reputation and jeopardize future financing opportunities. COMMUNICATION This report will be available on the City’s website and provided to the bank along with a certified copy of the Borrowing Bylaw. Public notice has been given pursuant to Section 101 of The Cities Act. DELEGATED AUTHORITY City Council approval is required to take out long term debt. Respectfully submitted, Jeff Ward, CPA, CA City Treasurer _____________________________________________________________ Efficiency, Effectiveness, Excellence