City approves securing a $5 million line of credit - just in cash they run short. In the past reserve funds were used as a funds source

By Staff

November 16th, 2022

BURLINGTON, ON

Council was asked earlier in the week to approve the by-law to authorize the temporary borrowings of monies from the Royal Bank of Canada to meet the ordinary expenditures of the corporation for the 2023 fiscal year; and have them execute the security agreement

The Finance department explains that at various times during the year, it may be necessary to arrange short-term loans from the City’s banker to meet the current ordinary expenditures of the municipality.

Joan Ford, the city’s Director of Finance knows where every dollar comes from and where every dollar gets spent.

There are times in the year when cash flow is at the lowest point and operating expenditures must be covered during the period just prior to the collection of the property taxes. In previous years, we have borrowed from our Reserve Funds during this time and will continue to do so as necessary in 2023.

Borrowing arrangements with the Royal Bank provide us with a $5,000,000 line of credit at the prime-lending rate minus 3/4%. At the current time, prime stands at 5.95%. It has not been necessary to access this credit line during 2022 or prior years nor is it anticipated to be needed for 2023. The by-law is prepared to meet the requirements of the banks.

The City also has borrowing arrangements with Scotia Bank to provide a credit facility of up to $2,000,000 for administering the City’s purchase card program. In 2022 and prior years, this credit facility was paid off monthly and the City anticipates that the facility will be used in the same manner in 2023.This borrowing agreement does not require a security agreement.

That security agreement is really sweet.

NOW IT IS AGREED by the Corporation that in consideration of the Bank advancing or providing the said sum or sums to the Corporation that all the revenues of the Corporation of whatever nature and kind are hereby charged to and in favour of the Bank, as security for payment of the moneys so advanced or provided by the Bank and any interest thereon and any other charges in connection therewith and the Bank shall have a lien upon all such revenues until the charge hereby and by the said By-law or Resolution created is satisfied.

The Corporation represents and warrants that the whole or any part or parts of the revenues of the Corporation are not subject to any prior charge, except as disclosed to the Bank in writing.

Those are your tax dollars that are being pledged