HomeMy WebLinkAboutFIN-09-041 - Investing in Ontario Act Grant Report1
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Financial Services
REPORT
Report To: Councillor Berry Vrbanovic, Chair, and Members of the
Finance and Corporate Services Committee
Date of Meeting: March 30, 2009
Submitted By: Dan Chapman, General Manager of Financial Services & City
Treasurer
Prepared By: Saleh Saleh, Senior Financial Analyst
Ward(s) Involved: All
Date of Report: March 24, 2009
Report No.: FIN-09-041
Subject: INVESTING IN ONTARIO GRANT ALLOCATION
RECOMMENDATION:
THAT the Investing in Ontario Act Grant received by the City of Kitchener in the amount of
$9,801,171 be allocated to the Consolidated Maintenance Facility project;
AND FURTHER THAT the ten-year capital forecast be amended to adjust the c/c allocation to
the CMF project as follows:
Year Original c/c Amended c/c Change
allocation ($000's) allocation ($000's) ($000's)
2010 5,051 1,965 (3,086)
2011 7,872 1,964 (5,908)
2012 2,771 1,964 807
(9,801)
BACKGROUND:
The Province of Ontario designated $1.1 billion out of the 2008 Provincial surplus for municipal
infrastructure improvements on August 25, 2008. The City of Kitchener's share of this funding,
referred to as the Investing in Ontario Act (IOA) Grant, is $9,801,171. It is recommended that
the IOA funding be allocated to the Consolidated Maintenance Facility (CMF) project to provide
immediate cash flow in lieu of funding that is anticipated to be in place over the 2010 to 2013
timeframe as identified in the City's ten-year capital forecast.
REPORT:
As identified in the cash flow projection underlying the approved CMF business case, the CMF
project is projected to have a cash flow deficit in 2009 reaching as high as $12.6 million. This
temporary cash shortfall is primarily attributed to the purchase of the BF Goodrich property in
advance of all funding being provided in the capital forecast. Future funding for the CMF is
identified in the City's Capital Forecast from 2010 to 2013 with funding sources that include
development charges, capital out of current (c/c), utility enterprise contributions and land sales.
Allocating IOA funding to the CMF project will provide immediate cash flow to the project, thus
reducing the internal financing costs which were originally anticipated to be in the order of $2.0
million. The mitigation of these interest costs will reduce the projected funding shortfall of $2.2
million for the project as identified in the approved business case. This allocation will provide
capacity in the c/c pool between 2010 and 2012 which will be allocated to other priority
infrastructure projects through the 2010 capital budget process.
FINANCIAL IMPLICATIONS:
It is recommended that IOA funding of $9,801,171 be fully allocated to the CMF project to
provide immediate cash flow in lieu of funding over the next several years, resulting in reduced
interest charges to the project. This allocation will provide capacity in the c/c pool between
2010 and 2012 which will be allocated to other priority infrastructure projects through the 2010
capital budget process.
COMMUNICATIONS:
In accordance with the requirements of the grant program, staff will report to the Province with
respect to the allocation of IOA funds as of March 31, 2009.
Dan Chapman, MPA, CA
General Manager of Financial Services & City Treasurer
Saleh Saleh, CPA, CGA
Senior Financial Analyst