O. Reg. 610/06: FINANCIAL ACTIVITIES
under City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A
Skip to contentCity of Toronto Act, 2006
Loi de 2006 sur la cité de Toronto
ONTARIO REGULATION 610/06
FINANCIAL ACTIVITIES
Historical version for the period August 10, 2011 to December 31, 2011.
Note: January 1, 2012 has been named by proclamation as the day on which section 184 of Schedule 1 (Housing Services Act, 2011) to the Strong Communities through Affordable Housing Act, 2011 comes into force.
Last amendment: O. Reg. 372/11.
This Regulation is made in English only.
CONTENTS
Definitions | |
Financial activities | |
PART I | |
Long-term borrowing | |
Temporary borrowing for long-term debt | |
Borrowing for expenses | |
Long-term borrowing for other municipalities and school boards | |
Principal and interest payments | |
Dates of debentures and revenue bonds | |
Consolidating debenture and revenue bond by-laws | |
Provisions in by-laws for debentures and revenue bonds | |
Sinking fund committee | |
Revenue bonds | |
Bank loan agreements | |
Construction financing | |
Statement of policies and goals | |
Report on outstanding long-term debt | |
Non-application | |
Fixed rate of interest | |
Variable rate | |
Condition | |
Agreements | |
Rating | |
Restriction | |
Prescribed currencies | |
Conditions for foreign currency debenture | |
Restriction | |
Conditions for foreign currency exchange agreement | |
Reports to council | |
PART II | |
Lease financing agreements | |
Schedule of fixed payments | |
Statement of policies and goals | |
Advice to council | |
Report to council | |
Contents of report | |
PART III | |
Definitions | |
Bond forward agreements | |
Statement of policies and goals re bond forward agreements | |
Report on bond forward agreements | |
Commodity price hedging agreements | |
Statement of policies and goals | |
Report on commodity price hedging agreements | |
PART IV | |
Eligible investments | |
Eligible investments, continued | |
Rating | |
Investment limit | |
Conditions | |
School purposes | |
Canadian dollars | |
Statement of policies and goals | |
Investment report | |
Inconsistencies, treasurer’s duty | |
Investments pre March 6, 1997 | |
Forward rate agreements | |
Statement of policies and goals | |
Reports to council | |
Joint investments | |
Definitions
“bank loan” means a loan made by a bank listed in Schedule I, II or III to the Bank Act (Canada), a loan corporation or trust corporation registered under the Loan and Trust Corporations Act or a credit union or league to which the Credit Unions and Caisses Populaires Act, 1994 applies, and includes,
(a) a syndicated bank loan, and
(b) a banker’s acceptance, whether or not it is discounted, if
(i) it is drawn as a bill of exchange under the Bills of Exchange Act (Canada), and
(ii) it is accepted by a bank to which the Bank Act (Canada) applies;
“currency risk” means the financial risk for the City associated with issuing debentures or revenue bonds in any currency because of fluctuations in rates of exchange between the Canadian dollar and other currencies;
“foreign currency debenture” or “foreign currency revenue bond” means a debenture or revenue bond, as the case may be, expressed and payable in a foreign currency;
“interest rate risk” means the financial risk associated with issuing debentures, bank loans or revenue bonds because of fluctuations in interest rates;
“person” includes a firm or partnership within the meaning of the Partnerships Act;
“revenue bond” means,
(a) an agreement entered into by the City for the borrowing of money whereby the City secures its obligations under the agreement,
(i) with an interest in fees, charges or any other revenues that are not tax revenues of the City, or
(ii) with an interest in any other property of the City, or
(b) a tax increment financing revenue bond;
“syndicated bank loan” means a bank loan between the City and an institution listed in the definition of “bank loan” where the financing for the bank loan is obtained through a syndicated bank financing agreement in which each of the institutions that is a party to the agreement agrees to contribute a portion of the amount of the bank loan being given to the City under the syndicated bank loan agreement;
“tax increment financing revenue bond” means an agreement entered into by the City for the borrowing of money whereby the City secures its obligations under the agreement with both,
(a) an amount of taxes that are a “municipal tax increment” as defined in the Tax Increment Financing Act, 2006, and
(b) payments by the Minister of Finance to the City under a financing agreement authorized under clause 3 (1) (c) of the Tax Increment Financing Act, 2006.
“treasurer” means the City treasurer;
“variable interest rate debenture” or “variable interest rate bank loan”, as the case may be, means a debenture or bank loan that provides for one or more variations in the rate of interest payable on the principal of the debt, whether or not by reference to a method or standard for determining changes to interest rates, but does not include an extendible or retractable term debenture where a change of interest rate is authorized by by-law, a debenture issued or bank loan agreement entered to refund an outstanding debenture or bank loan at maturity, or a change of interest rate authorized by a debenture by-law where council is of the opinion the change is necessary because the debentures remain unsold. O. Reg. 610/06, s. 1.
Financial activities
2. The City shall undertake the financial activities described in paragraphs 1 to 4 of section 245 of the Act in accordance with this Regulation. O. Reg. 610/06, s. 2.
PART I
LONG-TERM AND CURRENT BORROWING
Long-term borrowing
3. The City may for its purposes borrow money to obtain or provide long-term financing for any capital work by,
(a) issuing debentures;
(b) issuing revenue bonds;
(c) entering bank loan agreements. O. Reg. 265/07, s. 1.
Temporary borrowing for long-term debt
4. (1) The City may authorize temporary borrowing for a capital work or permanent improvement to be financed in whole or in part by the issue of debentures or by entering bank loan agreements if,
(a) it has approved the issue of debentures or entering a bank loan for a capital work; or
(b) it has approved the issue of debentures or entering a bank loan for a capital work or permanent improvement for another municipality or a school board. O. Reg. 610/06, s. 4 (1).
(2) The City shall only authorize temporary borrowing for a work or improvement under subsection (1) if,
(a) the City applies the proceeds of the borrowing only for the purposes for which the debentures are to be issued or the bank loan entered; or
(b) the other municipality or school board, as the case may be, agrees with the City to only apply the proceeds of the borrowing for the purposes for which the debentures are to be issued or the bank loan entered. O. Reg. 610/06, s. 4 (2).
(3) The City shall not require any lender to be responsible for ensuring the proceeds of temporary borrowing under subsection (1) are used for the capital work or permanent improvement for which the temporary borrowing was authorized. O. Reg. 610/06, s. 4 (3).
(4) If the City has approved the issue of debentures for another municipality or a school board but has not sold them, it may authorize the municipality or board to use the debentures as security for temporary borrowing to meet expenditures made by the municipality or board in connection with the capital work or permanent improvement to be financed in whole or in part by the debentures. O. Reg. 610/06, s. 4 (4).
Borrowing for expenses
5. (1) At any time during a fiscal year, the City may authorize temporary borrowing, until the taxes are collected and other revenues are received, of the amounts that the City considers necessary to meet the expenses of the City for the year and of the amounts, whether or not they are expenses for the year, that the City requires in the year for,
(a) reserve, sinking and retirement funds;
(b) principal and interest due on any debt of the City;
(c) school purposes;
(d) other purposes that the City, by law, is required to provide for; and
(e) the amount of principal and interest payable by a person or municipality primarily liable for a debt, if the City has guaranteed the debt and the debt is in default. O. Reg. 610/06, s. 5 (1); O. Reg. 297/09, s. 1 (1).
(2) Except with the approval of the Ontario Municipal Board, the total amount borrowed at any one time plus any outstanding amounts of principal borrowed and accrued interest shall not exceed,
(a) from January 1 to September 30 in the year, 50 per cent of the total estimated revenues of the City as set out in the budget adopted or readopted for the year; and
(b) from October 1 to December 31 in the year, 25 per cent of the total estimated revenues of the City as set out in the budget adopted or readopted for the year. O. Reg. 610/06, s. 5 (2).
(3) Until the budget is adopted in a year, the limits upon borrowing under subsection (2) shall temporarily be calculated using the estimated revenues of the City set out in the budget adopted or readopted for the previous year. O. Reg. 610/06, s. 5 (3).
(4) In subsections (2) and (3), estimated revenues do not include revenues derivable or derived from,
(a) arrears of taxes, fees or charges; or
(b) a payment from a reserve fund of the City, whether or not the payment is for a capital purpose. O. Reg. 297/09, s. 1 (2).
(5) The City shall not make any lender responsible for establishing the necessity of temporary borrowing under this section or the manner in which the borrowing is used. O. Reg. 610/06, s. 5 (5).
(6) In this section, “reserve fund” includes a reserve. O. Reg. 297/09, s. 1 (3).
Long-term borrowing for other municipalities and school boards
6. (1) If any Act authorizes one or more other municipalities and the City to provide money for any capital work jointly, the City may borrow money for that purpose by issuing debentures or entering bank loans. O. Reg. 610/06, s. 6 (1).
(2) The City may borrow money for the purposes of a school board under section 246 of the Act by issuing debentures or entering bank loans. O. Reg. 610/06, s. 6 (2).
(3) The City shall not issue a debenture or enter a bank loan under subsection (1) or authorize another municipality to issue a debenture or enter a bank loan for a joint capital work of the City and the other municipality unless the debenture or loan is a joint and several obligation of the City and the other municipality. O. Reg. 610/06, s. 6 (3).
(4) The City shall not issue a debenture or enter a bank loan under subsection (2) unless the debenture or loan is a joint and several obligation of the City and the school board. O. Reg. 610/06, s. 6 (4).
Principal and interest payments
7. (1) A debenture or bank loan by-law passed by the City,
(a) shall provide for raising in each year as part of the general levy the amounts of principal and interest payable in each year under the by-law to the extent that the amounts have not been provided for,
(i) by other taxes or by fees or charges levied or imposed on persons or property by a by-law of any municipality, or
(ii) by the amounts payable to the City by a school board in each year in relation to the repayment of the debenture or bank loan where the City has borrowed for the purposes of the school board under subsection 6 (2);
(b) shall provide for repayment of the principal in annual instalments and payment of the interest on the unpaid balance in one or more instalments in each year;
(c) may provide for instalments of combined principal and interest; and
(d) despite clause (b), may provide that instalments of principal, interest or both are not payable during the period of construction of a work for which the debenture or bank loan debt was incurred, as estimated by city council, but not to exceed five years. O. Reg. 610/06, s. 7 (1).
(2) A revenue bond by-law passed by the City,
(a) shall provide for raising in each year the amounts of principal and interest payable in each year under the by-law;
(b) shall provide for repayment of the principal in annual instalments and payment of the interest on the unpaid balance in one or more instalments in each year;
(c) may provide for instalments of combined principal and interest; and
(d) despite clause (b), may provide that instalments of principal, interest or both are not payable during the period of construction of a work for which the revenue bond debt was incurred, as estimated by city council, but not to exceed five years. O. Reg. 610/06, s. 7 (2).
(3) The total amount of principal and interest that must be raised in a year under clause (1) (a) does not include any outstanding amount of principal specified as payable on the maturity date of a debenture or bank loan if one or more refinancing debentures or bank loans are issued by the City on or before the maturity date in respect of the outstanding principal. O. Reg. 610/06, s. 7 (3).
(4) The total amount of principal and interest that must be raised in a year under clause (2) (a) does not include any outstanding amount of principal specified as payable on the maturity date of a revenue bond if one or more refinancing revenue bonds are issued by the City on or before the maturity date in respect of the outstanding principal. O. Reg. 610/06, s. 7 (4).
(5) The City shall not reduce the amount recoverable for a debenture or revenue bond even if the debenture or revenue bond is negotiated at a discount by the City. O. Reg. 610/06, s. 7 (5).
Dates of debentures and revenue bonds
8. The City may date debentures or revenue bonds before the issuing by-law is passed if the by-law provides for the first amount for repayment being raised in the year in which the debentures or bonds are dated or in the next year. O. Reg. 610/06, s. 8.
Consolidating debenture and revenue bond by-laws
9. (1) The City may by by-law provide for the issue of one series of debentures,
(a) for two or more capital works if the City has not passed debenture by-laws to authorize the borrowing; or
(b) if the City has passed separate debenture by-laws authorizing borrowing for two or more capital works but has not sold any of the debentures. O. Reg. 610/06, s. 9 (1).
(2) The City may by by-law provide for the issue of one series of revenue bonds,
(a) for two or more capital works if the City has not passed revenue bond by-laws to authorize the borrowing; or
(b) if the City has passed separate revenue bond by-laws authorizing borrowing for two or more capital works but has not sold any of the bonds. O. Reg. 610/06, s. 9 (2).
(3) A by-law under subsection (1) or (2),
(a) shall recite or otherwise refer to any separate by-laws it consolidates; and
(b) may authorize the issue of debentures or bonds, as the case may be, in one series even if the principal and interest of some of the debentures or bonds is payable on different dates than the payment dates for other debentures or bonds in the series. O. Reg. 610/06, s. 9 (3).
Provisions in by-laws for debentures and revenue bonds
10. (1) The City may provide in a debenture by-law,
(a) that all or a portion of the debentures are sinking fund debentures which have the principal payable on a fixed date;
(b) that a portion of the debentures are term debentures which have,
(i) the principal payable on a fixed date, and
(ii) a retirement fund for the repayment of the principal which does not require payment into it to begin until after the principal of the other debentures issued under the by-law become payable; or
(c) that a retirement fund be established for the repayment of the principal amount of a class or classes of its debentures other than sinking fund or term debentures. O. Reg. 610/06, s. 10 (1).
(2) The City may provide in a revenue bond by-law,
(a) that all or a portion of the revenue bonds are sinking fund bonds which have the principal payable on a fixed date;
(b) that a portion of the revenue bonds are term bonds which have,
(i) the principal payable on a fixed date, and
(ii) a retirement fund for the repayment of the principal which does not require payment into it to begin until after the principal of the other bonds issued under the by-law become payable; or
(c) that a retirement fund be established for the repayment of the principal amount of a class or classes of its revenue bonds other than sinking fund or term bonds. O. Reg. 610/06, s. 10 (2).
(3) A by-law passed under this section shall provide for the following amounts:
1. In respect of a sinking fund by-law, an estimated amount in each year for the sinking fund which, with interest compounded annually, will be sufficient to pay the principal of the debentures or revenue bonds at maturity.
2. In respect of a term debenture or revenue bond by-law, in each year that a payment is made into the retirement fund, an estimated amount in each year for the retirement fund which, with interest compounded annually, will be sufficient to pay the principal of the debentures or bonds at maturity.
3. In respect of a retirement fund by-law for a class of debentures or revenue bonds other than a sinking fund or term debenture or revenue bond, in each year an amount equal to or greater than the amount that would have been required for the repayment of the principal of the debentures or bonds in that year if the principal had been payable in equal annual instalments and the debentures or bonds had been issued for the maximum period authorized by the City for the repayment of the debt for which the debentures or bonds were issued. O. Reg. 610/06, s. 10 (3).
(4) An amount required to be provided in a year under subsection (3) shall be deemed to be an amount of principal payable in the year for the purposes of clause 7 (1) (a) or (2) (b), as the case may be. O. Reg. 610/06, s. 10 (4).
(5) Despite clauses 7 (1) (b) and (2) (b), a by-law under subsection (1) or (2) is not required to provide for repayment of the principal in annual instalments. O. Reg. 610/06, s. 10 (5).
(6) On or before December 31 in each year, the city auditor shall certify the balance in each sinking and retirement fund of the City for the year. O. Reg. 610/06, s. 10 (6).
(7) If the balance certified is less than the amount required in the year for the repayment of the sinking or retirement fund debentures or revenue bonds for which the fund was established, the City shall pay an amount sufficient to make up the deficiency into the sinking or retirement fund. O. Reg. 610/06, s. 10 (7).
Sinking fund committee
11. A sinking fund committee of the City,
(a) shall manage the sinking fund and retirement funds established by the City;
(b) shall invest money in those funds in any securities that the City is permitted to invest in, including approving or not approving any investment or disposition of that investment; and
(c) may apply amounts or balances in a sinking or retirement fund to other sinking or retirement funds. O. Reg. 610/06, s. 11.
Revenue bonds
12. The City shall not secure a borrowing evidenced by a revenue bond,
(a) with debentures or other securities issued by the City or with interest on or other revenue payable from them; or
(b) by means of the creation or assignment of an interest in real property of the City, including a mortgage, charge or lease of that real property, other than,
(i) an interest in a fixture, or
(ii) an assignment of a right to payment under a mortgage, charge or lease where the assignment does not convey or transfer the City’s interest in the real property. O. Reg. 610/06, s. 12.
Bank loan agreements
13. (1) The City shall not enter into a bank loan agreement unless the agreement,
(a) sets out the amount of money to be borrowed; and
(b) provides that the agreement shall not be assigned without the prior written consent of the City. O. Reg. 610/06, s. 13 (1).
(2) The City shall not enter into a bank loan agreement that provides for the giving of any security by the City for the debt. O. Reg. 610/06, s. 13 (2).
(3) The City shall not enter a bank loan agreement unless the bank loan ranks concurrently and equally in respect of payment of principal and interest with all other bank loans and debentures of the City. O. Reg. 610/06, s. 13 (3).
(4) If the City borrows money through a bank loan for a school board or another municipality, the City shall not require the interest payable in default on the loan by the school board or other municipality to the City to exceed 15 per cent per year. O. Reg. 610/06, s. 13 (4).
(5) If the City borrows money through a bank loan for a school board or another municipality, the borrowing by-law shall provide for the raising as part of the general levy the amounts payable under the by-law in any previous year to the extent the amounts have not been paid over to the City by the school board or other municipality in accordance with the by-law. O. Reg. 610/06, s. 13 (5).
(6) This section does not apply to a bank loan agreement entered into by the City for the purposes authorized by section 4 or 5. O. Reg. 610/06, s. 13 (6).
Construction financing
14. If the City passes a by-law under clause 7 (1) (d) or (2) (d) providing that instalments of principal or interest, or both, are not payable during the period of construction of an undertaking for which the debt was incurred, the City shall do so only in accordance with sections 15 and 16. O. Reg. 610/06, s. 14.
Statement of policies and goals
15. (1) Before the City passes a by-law under clause 7 (1) (d) or 7 (2) (d), the council shall adopt a statement of policies and goals related to construction financing. O. Reg. 610/06, s. 15 (1).
(2) In preparing the statement under subsection (1), the council shall consider,
(a) the fixed and estimated costs to the City;
(b) whether the costs of the proposed financing for the construction of the undertaking are lower than other methods of financing available to the City;
(c) a detailed estimate with respect to the terms of the City’s expectations of revenue generation from the undertaking, once constructed;
(d) the risks to the City if the undertaking is not constructed or completed within the period of construction as estimated by the council; and
(e) the financial and other risks for the City. O. Reg. 610/06, s. 15 (2).
Report on outstanding long-term debt
16. (1) If the City has any outstanding debt under clause 7 (1) (d) or (2) (d) in a fiscal year, the treasurer shall prepare and present to the council once in that fiscal year, or more frequently if the council so provides, a detailed report on all of that debt. O. Reg. 610/06, s. 16 (1).
(2) The report under subsection (1) shall contain,
(a) a description of the estimated proportion of the total debt of the City under clause 7 (1) (d) or (2) (d) to the total long-term debt of the City and a description of the change, if any, in that estimated proportion since the previous year’s report;
(b) a statement by the treasurer as to whether, in his or her opinion, all debt under clause 7 (1) (d) or (2) (d) of the Act was issued in accordance with the statement of policies and goals relating to construction financing adopted by the City;
(c) an update of the detailed estimate made under clause 15 (2) (c) with respect to the terms of the City’s expectations of revenue generation from the undertaking;
(d) a record of the date of the repayment of each instalment of principal, interest or both principal and interest made during the period of construction of the undertaking for which the debt under clause 7 (1) (d) or (2) (d) was issued;
(e) a statement of the outstanding instalments of principal, interest or both principal and interest repayable during the currency of the debt issued under clause 7 (1) (d) or (2) (d) that will be due and payable in each year; and
(f) such other information as the council may require or that, in the opinion of the treasurer, should be included. O. Reg. 610/06, s. 16 (2).
Non-application
17. Sections 18 to 27 do not apply to a bank loan agreement entered into by the City for the purposes authorized by section 4 or 5. O. Reg. 610/06, s. 17.
Fixed rate of interest
18. (1) A by-law for the issue of debentures or to enter a bank loan agreement shall specify a fixed rate of interest, unless the by-law is made under section 19. O. Reg. 610/06, s. 18 (1).
(2) A by-law for the issue of revenue bonds shall specify a fixed rate of interest. O. Reg. 610/06, s. 18 (2).
(3) The City may amend a debenture or revenue bond by-law before the debentures or bonds are sold to provide for,
(a) a different rate of interest;
(b) a change in the amount to be raised annually because of the different interest rate; and
(c) other changes in any by-law necessary to give effect to the amending by-law. O. Reg. 610/06, s. 18 (3).
(4) For the purposes of subsection (3), the use of debentures as security for temporary borrowing does not prevent the City from passing by-laws under subsection (3) with respect to those debentures. O. Reg. 610/06, s. 18 (4).
Variable rate
19. (1) Subject to this section and sections 20 to 23, the City may pass by-laws for the issue of debentures or the entering of bank loans providing for variations in the rate of interest or classes of rates of interest. O. Reg. 610/06, s. 19 (1).
(2) A by-law passed under subsection (1) may provide for raising or paying an estimated amount in a year. O. Reg. 610/06, s. 19 (2).
(3) The estimated amount may vary from year to year. O. Reg. 610/06, s. 19 (3).
Condition
20. (1) The City shall not issue a debenture or enter a bank loan agreement with a variable interest rate if the total amount of principal to be financed under the debenture or bank loan plus the total outstanding principal of all other variable interest rate bank loans and variable interest rate debentures of the City would exceed 15 per cent of the total outstanding principal of all undertaking or work indebtedness of the City plus the total amount of principal to be financed under the debenture. O. Reg. 610/06, s. 20 (1).
(2) The amounts in subsection (1) may be estimated by the treasurer. O. Reg. 610/06, s. 20 (2).
(3) In this section,
“outstanding principal” means,
(a) for a debenture or revenue bond with a sinking or retirement fund for the debenture or revenue bond, the difference between the principal amount of the debenture or revenue bond and the amount in the sinking or retirement fund,
(b) any principal amount of a bank loan, debenture or revenue bond, other than a debenture or revenue bond described in clause (a) that has not been repaid,
(c) any principal amount of temporary borrowing or advances for an undertaking to be financed by or through long-term debt that has not been repaid;
“undertaking or work indebtedness” means bank loan, revenue bond or debenture debt and temporary borrowing or advances for an undertaking to be financed by or through long-term debt. O. Reg. 610/06, s. 20 (3).
Agreements
21. (1) Subject to subsection (3), the City, if it has issued or plans to issue a variable interest rate debenture or plans to enter or has entered a variable interest rate bank loan agreement, may enter interest rate exchange agreements for the debenture or bank loan. O. Reg. 610/06, s. 21 (1).
(2) If the City has issued or plans to issue a fixed interest rate debenture or revenue bond, it may enter interest rate exchange agreements for the debenture or bond only if the debenture or bond is also a foreign currency debenture or bond. O. Reg. 610/06, s. 21 (2).
(3) The City shall enter one or more replacement interest rate exchange agreements for an executed interest rate exchange agreement if a person other than the City who is party to the agreement or an assignee,
(a) becomes bankrupt within the meaning of any bankruptcy or insolvency Act in force in Ontario;
(b) is no longer in compliance with a rating or requirement under section 23;
(c) defaults under the agreement; or
(d) assigns the agreement or rights under the agreement to any person without the consent of the City. O. Reg. 610/06, s. 21 (3).
(4) Any interest rate exchange agreement or agreements for a debenture, bank loan or revenue bond shall, when read together, provide for the reduction of interest rate risk with respect to all or a portion of the interest payable under the debenture, bank loan or bond. O. Reg. 610/06, s. 21 (4).
(5) Any interest rate exchange agreement or agreements for a debenture, bank loan or revenue bond shall, when read together, require any amount of interest addressed by the agreement or agreements and payable by the City to any person under the agreement or agreements to be expressed as a specific and fixed Canadian currency amount. O. Reg. 610/06, s. 21 (5).
Rating
22. On the date the City issues a variable interest rate debenture or enters a variable interest rate bank loan, either the City itself or all of its long-term debt obligations must be rated,
(a) by Dominion Bond Rating Service Limited as “AA(Low)” or higher;
(b) by Fitch Ratings as “AA-” or higher;
(c) by Moody’s Investors Service, Inc. as “Aa3” or higher; or
(d) by Standard and Poor’s as “AA-” or higher. O. Reg. 610/06, s. 22.
Restriction
23. The City may only enter an interest rate exchange agreement with,
(a) a person who has one or more debt obligations which on the date the agreement is entered are rated,
(i) by Dominion Bond Rating Service Limited as “AA(Low)” or higher,
(ii) by Fitch Ratings as “AA-” or higher,
(iii) by Moody’s Investors Service, Inc. as “Aa3” or higher, or
(iv) by Standard and Poor’s as “AA-” or higher; or
(b) a person whose obligations under the agreement are unconditionally guaranteed by a person described in clause (a). O. Reg. 610/06, s. 23.
Prescribed currencies
24. (1) The City may issue foreign currency debentures in the foreign currencies in the following foreign currencies:
1. Dollars of Australia.
2. Revoked: O. Reg. 297/09, s. 2.
3. Revoked: O. Reg. 297/09, s. 2.
4. Yen of Japan.
5. Revoked: O. Reg. 297/09, s. 2.
6. Francs of Switzerland.
7. Sterling money of the United Kingdom.
8. Dollars of the United States of America.
9. The euro currency adopted by member states of the European Union. O. Reg. 610/06, s. 24 (1); O. Reg. 297/09, s. 2.
(2) The City may issue foreign currency revenue bonds in dollars of the United States of America. O. Reg. 610/06, s. 24 (2).
Conditions for foreign currency debenture
25. The City may only issue a foreign currency debenture or revenue bond if,
(a) it enters one or more foreign currency exchange agreements for the debenture or revenue bond on or before the date it issues the debenture or bond; and
(b) on the date the debenture or revenue bond is issued, either the City itself or all of its long-term debt obligations are rated,
(i) by Dominion Bond Rating Service Limited as “AA(Low)” or higher,
(ii) by Fitch Ratings as “AA-” or higher,
(iii) by Moody’s Investors Service, Inc. as “Aa3” or higher, or
(iv) by Standard and Poor’s as “AA-” or higher. O. Reg. 610/06, s. 25.
Restriction
26. (1) The City may only enter a foreign currency exchange agreement with,
(a) a person who has one or more debt obligations which on the date the agreement is entered are rated,
(i) by Dominion Bond Rating Service Limited as “AA(Low)” or higher,
(ii) by Fitch Ratings as “AA-” or higher,
(iii) by Moody’s Investors Service, Inc. as “Aa3” or higher, or
(iv) by Standard and Poor’s as “AA-” or higher; or
(b) a person whose obligations under the agreement are unconditionally guaranteed by a person described in clause (a). O. Reg. 610/06, s. 26 (1).
(2) The City may only enter a foreign currency exchange agreement for a foreign currency debenture or revenue bond. O. Reg. 610/06, s. 26 (2).
Conditions for foreign currency exchange agreement
27. (1) Any foreign currency exchange agreement or agreements for a debenture or revenue bond shall, when read together, provide for the reduction of currency risk with respect to the entire amount of principal and interest payable under the debenture or revenue bond. O. Reg. 610/06, s. 27 (1).
(2) Any foreign currency exchange agreement or agreements for a debenture or revenue bond shall, when read together, require any amount payable by the City to any person under the agreement or agreements to be expressed as a Canadian currency amount. O. Reg. 610/06, s. 27 (2).
(3) Subject to subsection (4), the City may only enter a foreign currency exchange agreement for a debenture or revenue bond on or before the date the debenture or revenue bond is issued. O. Reg. 610/06, s. 27 (3).
(4) The City shall enter a replacement foreign currency exchange agreement for an executed foreign currency exchange agreement if a person other than the City who is party to the agreement or an assignee,
(a) becomes bankrupt within the meaning of any bankruptcy or insolvency Act in force in Ontario;
(b) is no longer in compliance with a rating or requirement under section 26;
(c) defaults under the agreement; or
(d) assigns the agreement or rights under the agreement to any person without the consent of the City. O. Reg. 610/06, s. 27 (4).
Reports to council
28. (1) If the City has any outstanding borrowing with a variable rate of interest in a fiscal year, or any subsisting interest rate or foreign currency exchange agreements applicable to them, the treasurer of the City shall prepare and present to the council once in that fiscal year, or more frequently if the council so desires, a detailed report on the borrowing. O. Reg. 610/06, s. 28 (1).
(2) In subsection (1),
“borrowing” means a borrowing evidenced by a debenture, revenue bond or bank loan agreement referred to in section 3. O. Reg. 610/06, s. 28 (2).
PART II
LEASE FINANCING AGREEMENTS
Lease financing agreements
29. (1) The City may enter lease financing agreements for the purpose of obtaining long-term financing of a capital undertaking of the City. O. Reg. 610/06, s. 29 (1).
(2) Sections 30 to 34 apply to any lease financing agreement the City enters for the purpose of financing a capital undertaking if the agreement requires or may require the City to make payments after the expiry of the term for which the council authorizing the agreement was elected. O. Reg. 610/06, s. 29 (2).
(3) For the purposes of sections 31 and 32, a lease financing agreement has a material impact if the costs or risks associated with the agreement could reasonably be expected to have a significant impact on the financing decisions of the City. O. Reg. 610/06, s. 29 (3).
Schedule of fixed payments
30. A lease financing agreement must include a schedule of all fixed payments, if any, required by the agreement and that may be required by any extension or renewal of the agreement. O. Reg. 610/06, s. 30.
Statement of policies and goals
31. (1) Before the City passes a by-law authorizing a lease financing agreement, the council shall adopt a statement of policies and goals relating to the use of lease financing agreements. O. Reg. 610/06, s. 31 (1).
(2) The statement of policies and goals,
(a) must include a discussion of the financial and other risks to the City of using lease financing agreements; and
(b) may provide for a category of lease financing agreements composed of agreements which, in the opinion of both the council and the treasurer, would not result in a material impact. O. Reg. 610/06, s. 31 (2).
Advice to council
32. (1) Before the City enters into a lease financing agreement, the council shall,
(a) have the treasurer prepare a report with a recommendation, assessing, in the opinion of the treasurer, the costs and financial and other risks associated with the proposed agreement, including,
(i) a comparison between the fixed and estimated costs and the risks associated with the proposed agreement and those associated with other methods of financing,
(ii) a statement summarizing, as may be applicable, the effective rate or rates of financing for the agreement, the ability for agreement payment amounts to vary, and the methods or calculations, including possible financing rate changes, that may be used to establish that variance under the agreement,
(iii) a statement summarizing any contingent payment obligations under the agreement that in the opinion of the treasurer would result in a material impact, including agreement termination provisions, equipment loss, equipment replacement options and guarantees and indemnities,
(iv) a summary of the assumptions applicable to any possible variations in the agreement payment and contingent payment obligations, and
(v) any other matters the treasurer or council considers advisable;
(b) obtain legal advice and financial advice with respect to the proposed agreement;
(c) consider if the scope of the proposed transaction warrants obtaining legal advice or financial advice with respect to the proposed agreement that is from a source independent of the source of the advice mentioned in clause (b); and
(d) consider and give its assessment of the report prepared under clause (a), including whether, in its opinion, the costs of financing for the proposed agreement are lower than other methods of financing available to the City, and whether the risks associated with the proposed agreement are reasonable. O. Reg. 610/06, s. 32 (1).
(2) The costs and risks associated with a proposed lease financing agreement in a report made under subsection (1) shall be assessed as of the date the report is made. O. Reg. 610/06, s. 32 (2).
(3) At any time after a report under subsection (1) is made, but before the proposed lease financing agreement is entered into, if the treasurer becomes of the opinion that a changed circumstance with respect to the proposed agreement may result in a material impact, the treasurer shall as soon as is reasonably possible update the report and present the updated report to the council. O. Reg. 610/06, s. 32 (3).
(4) A report made under subsection (1) shall summarize the information required by that subsection for the entire term of the proposed lease financing agreement, including any possible extensions or renewals. O. Reg. 610/06, s. 32 (4).
(5) Despite this section, the City may enter into a lease financing agreement without complying with the requirements of subsection (1) if,
(a) the statement of policies and goals for lease financing agreements includes the category referred to in clause 31 (2) (b); and
(b) in the opinion of the treasurer and the council, the proposed agreement is within that category, and its costs and risks, in combination with all the other agreements of that category entered into or proposed to be entered into in that year by the City, would not result in a material impact for the City. O. Reg. 610/06, s. 32 (5).
(6) In this section,
“costs” includes the costs of any advice obtained under clauses (1) (b) and (c). O. Reg. 610/06, s. 32 (6).
Report to council
33. If the City has one or more lease financing agreements subsisting in a fiscal year, the treasurer shall prepare and present to council once in that fiscal year, or more often if the council so desires, a detailed report containing the information described in section 34. O. Reg. 610/06, s. 33.
Contents of report
34. The detailed report mentioned in section 33 shall contain,
(a) a description of the estimated proportion of the total financing arrangements of the City that is undertaken through lease financing agreements to the total long-term debt of the City and a description of the change, if any, in that estimated proportion since the previous year’s report;
(b) a statement by the treasurer as to whether, in his or her opinion, all lease financing agreements were made in accordance with the statement of leasing policies and goals adopted by the City; and
(c) any other information that the council may require or that, in the opinion of the treasurer, should be recorded. O. Reg. 610/06, s. 34.
PART III
DEBT RELATED FINANCIAL INSTRUMENTS
Definitions
“bond forward agreement” means a financial agreement described in section 36;
“commodity” means, whether in the original or a processed state, an agricultural product, a forest product, a product of the sea, a mineral, a metal, a hydrocarbon fuel, electricity, a precious stone or other gem and other physical goods but does not include chattel paper, a document of title, an instrument, money or securities;
“commodity price hedging agreement” means a financial agreement described in section 39. O. Reg. 610/06, s. 35.
Bond forward agreements
36. (1) If the City has passed a by-law authorizing the issue or refinancing of debentures denominated in Canadian currency, the City may enter a bond forward agreement in order to minimize the cost or risk associated with the debentures because of fluctuations in interest rates. O. Reg. 610/06, s. 36 (1).
(2) A bond forward agreement shall provide for the following matters:
1. Borrowing and selling one or more debt instruments issued by the Government of Canada or the Province of Ontario (“government debt instruments”).
2. Buying back the government debt instruments.
3. Specifying a settlement day, which is a specified future date or the date on which a specified future event occurs.
4. Requiring a settlement payment to be payable on the settlement day if there is a difference between the price at which the government debt instruments are sold as described in paragraph 1 and the price at which they are bought back as described in paragraph 2.
5. Specifying that delivery of a document evidencing the government debt instrument is not required under the agreement. O. Reg. 610/06, s. 36 (2).
(3) The City shall not enter a bond forward agreement if the total value of the principal of the government debt instruments borrowed and sold as described in paragraph 1 of subsection (2) exceeds the total value of the principal of the debentures whose cost or risk the agreement is intended to minimize. O. Reg. 610/06, s. 36 (3).
(4) If the City enters a bond forward agreement the City shall monitor the value of the government debt instruments described in paragraph 1 of subsection (2) on each business day after the agreement is executed and before the settlement day described in paragraph 3 of subsection (1), but the City shall not obtain the information about the value of the instruments from any person who has a financial interest in the agreement or in the instruments. O. Reg. 610/06, s. 36 (4).
(5) The City shall not enter a bond forward agreement under which the settlement day described in paragraph 3 of subsection (2) is 180 days or more after the day on which the agreement is executed. O. Reg. 610/06, s. 36 (5); O. Reg. 297/09, s. 3.
(6) The City shall not enter a bond forward agreement under which the settlement payment exceeds the difference in price described in paragraph 4 of subsection (2). O. Reg. 610/06, s. 36 (6).
(7) The City shall not enter a bond forward agreement except with a bank listed in Schedule I, II or III to the Bank Act (Canada) and only if the bank’s long-term debt obligations on the day the agreement is entered are rated,
(a) by Dominion Bond Rating Service as “A(high)” or higher;
(b) by Fitch Ratings as “A+” or higher;
(c) by Moody’s Investors Service Inc. as “A1” or higher; or
(d) by Standard and Poor’s as “A+” or higher. O. Reg. 610/06, s. 36 (7).
(8) The City shall not sell or lend a bond forward agreement. O. Reg. 610/06, s. 36 (8).
(9) If the bond forward agreement relates to debentures to be issued or refinanced for the purposes of another municipality, the City and the other interested municipalities may enter one or more agreements relating to the costs of the bond forward agreement and relating to other matters arising from the bond forward agreement. O. Reg. 610/06, s. 36 (9).
(10) The City shall not use the proceeds from a bond forward agreement except for the following purposes:
1. To pay the interest or repay the principal of the debentures to which the agreement relates.
2. For any purpose for which the debentures were issued.
3. To pay the interest or repay the principal of any outstanding temporary borrowing under section 4 in connection with the debentures.
4. To pay the interest or repay the principal of any other outstanding borrowing by the City for a capital expenditure. O. Reg. 610/06, s. 36 (10).
Statement of policies and goals re bond forward agreements
37. (1) Before the City passes a by-law authorizing a bond forward agreement, the council shall adopt a statement of policies and goals relating to the use of bond forward agreements. O. Reg. 610/06, s. 37 (1).
(2) The council shall consider the following matters when preparing the statement of policies and goals:
1. The types of projects for which bond forward agreements are appropriate.
2. The fixed costs and estimated costs to the City resulting from the use of such agreements.
3. A detailed estimate of the expected results of using such agreements.
4. Risk control measures relating to such agreements, such as,
i. credit exposure limits based on credit ratings and on the degree of regulatory oversight and the regulatory capital of the other party to the agreement,
ii. standard agreements, and
iii. ongoing monitoring with respect to the agreements.
5. The financial and other risks to the City that would exist with, and without, the use of such agreements. O. Reg. 610/06, s. 37 (2).
Report on bond forward agreements
38. (1) If the City has entered any bond forward agreements in a fiscal year, the treasurer shall prepare and present to the council once in that fiscal year, or more frequently if the council so desires, a detailed report on all of those agreements. O. Reg. 610/06, s. 38 (1).
(2) The report must contain the following information and documents:
1. A statement comparing the expected and actual results of using bond forward agreements during the period of the report.
2. A statement by the treasurer indicating whether, in his or her opinion, all of the bond forward agreements entered during the period of the report are consistent with the City’s statement of policies and goals relating to the use of bond forward agreements.
3. Such other information as the council may require.
4. Such other information as the treasurer considers appropriate to include in the report. O. Reg. 610/06, s. 38 (2).
Commodity Price Hedging Agreements
Commodity price hedging agreements
39. (1) If the City has entered, or plans to enter, an agreement under Part II of the Act for the supply of a commodity required for a City system, the City may enter into one or more financial agreements to minimize the cost or financial risk associated with incurring debt for the commodity. O. Reg. 610/06, s. 39 (1).
(2) The financial agreement must fix, directly or indirectly, or enable the City to fix the price or range of prices to be paid by the City for the future delivery of some or all of the commodity or the future cost to the City of an equivalent quantity of the commodity. O. Reg. 610/06, s. 39 (2).
(3) Subject to subsection (4), the City shall not sell or otherwise dispose of the financial agreement or any interest of the City in the agreement. O. Reg. 610/06, s. 39 (3).
(4) The City may sell or otherwise dispose of the financial agreement or an interest of the City in the agreement if, in the opinion of the treasurer, the sale or disposition is in the best interests of the City and if either of the following conditions is satisfied:
1. The sale or disposition is part of a transaction for the sale of real property by the City relating to a change in the use of the property by the City.
2. The City has ceased to carry on any activity relating to the City system for which the commodity was being acquired. O. Reg. 610/06, s. 39 (4).
Statement of policies and goals
40. (1) Before the City passes a by-law authorizing a commodity price hedging agreement, the council shall adopt a statement of policies and goals relating to the use of financial agreements to address commodity pricing and costs. O. Reg. 610/06, s. 40 (1).
(2) The council shall consider the following matters when preparing the statement of policies and goals:
1. The types of projects for which commodity price hedging agreements are appropriate.
2. The fixed costs and estimated costs to the City resulting from the use of such agreements.
3. Whether the future price or cost to the City of the applicable commodities will be lower or more stable than they would be without the agreements.
4. A detailed estimate of the expected results of using such agreements.
5. The financial and other risks to the City that would exist with, and without, the use of such agreements.
6. Risk control measures relating to such agreements, such as,
i. credit exposure limits based on credit ratings and on the degree of regulatory oversight and the regulatory capital of the other party to the agreement,
ii. standard agreements, and
iii. ongoing monitoring with respect to the agreements. O. Reg. 610/06, s. 40 (2).
Report on commodity price hedging agreements
41. (1) If the City has any subsisting commodity price hedging agreements in a fiscal year, the treasurer shall prepare and present to the council once in that fiscal year, or more frequently if the council so desires, a detailed report on all of those agreements. O. Reg. 610/06, s. 41 (1).
(2) The report must contain the following information and documents:
1. A statement about the status of the agreements during the period of the report, including a comparison of the expected and actual results of using the agreements.
2. A statement by the treasurer indicating whether, in his or her opinion, all of the agreements entered during the period of the report are consistent with the City’s statement of policies and goals relating to the use of financial agreements to address commodity pricing and costs.
3. Such other information as the council may require.
4. Such other information as the treasurer considers appropriate to include in the report. O. Reg. 610/06, s. 41 (2).
PART IV
ELIGIBLE INVESTMENTS AND RELATED FINANCIAL AGREEMENTS
Eligible investments
42. The following are prescribed for the purposes of paragraphs 1 and 4 of section 245 of the Act as securities in which the City may invest:
1. Bonds, debentures, promissory notes or other evidence of indebtedness issued or guaranteed by,
i. Canada or a province or territory of Canada,
ii. an agency of Canada or a province or territory of Canada,
iii. a country other than Canada,
iv. a municipality in Canada including the City, if it is making the investment,
v. the Ontario Strategic Infrastructure Financing Authority,
vi. a school board or similar entity in Canada,
vii. a university in Ontario that is authorized to engage in an activity described in section 3 of the Post-secondary Education Choice and Excellence Act, 2000,
viii. the board of governors of a college established under the Ontario Colleges of Applied Arts and Technology Act, 2002,
ix. a local board as defined in the Municipal Affairs Act (but not including a school board or a municipality) or a conservation authority established under the Conservation Authorities Act,
x. a board of a public hospital within the meaning of the Public Hospitals Act,
xi. a non-profit housing corporation incorporated under section 13 of the Housing Development Act,
xii. a local housing corporation as defined in section 2 of the Social Housing Reform Act, 2000, or
Note: On the day section 184 of Schedule 1 (Housing Services Act, 2011) to the Strong Communities through Affordable Housing Act, 2011 comes into force, subparagraph xii is revoked and the following substituted:
xii. a local housing corporation as defined in section 24 of the Housing Services Act, 2011, or
See: O. Reg. 372/11, ss. 1, 2.
xiii. the Municipal Finance Authority of British Columbia.
2. Bonds, debentures, promissory notes or other evidence of indebtedness of a corporation if,
i. the bond, debenture or other evidence of indebtedness is secured by the assignment, to a trustee, as defined in the Trustee Act, of payments that Canada or a province or territory of Canada has agreed to make or is required to make under a federal, provincial or territorial statute, and
ii. the payments referred to in subparagraph i are sufficient to meet the amounts payable under the bond, debenture or other evidence of indebtedness, including the amounts payable at maturity.
3. Deposit receipts, deposit notes, certificates of deposit or investment, acceptances or similar instruments the terms of which provide that the principal and interest shall be fully repaid no later than two years after the day the investment was made, if the receipt, note, certificate or instrument was issued, guaranteed or endorsed by,
i. a bank listed in Schedule I, II or III to the Bank Act (Canada),
ii. a loan corporation or trust corporation registered under the Loan and Trust Corporations Act, or
iii. a credit union or league to which the Credit Unions and Caisses Populaires Act, 1994 applies.
4. Deposit receipts, deposit notes, certificates of deposit or investment, acceptances or similar instruments the terms of which provide that the principal and interest shall be fully repaid more than two years after the day the investment was made, if the receipt, note, certificate or instrument was issued, guaranteed or endorsed by,
i. a bank listed in Schedule I, II or III to the Bank Act (Canada),
ii. a loan corporation or trust corporation registered under the Loan and Trust Corporations Act,
iii. a credit union or league to which the Credit Unions and Caisses Populaires Act, 1994 applies.
5. Bonds, debentures, promissory notes or other evidence of indebtedness issued or guaranteed by an institution listed in paragraph 4.
6. Short-term securities, the terms of which provide that the principal and interest shall be fully repaid no later than three days after the day the investment was made, that are issued by,
i. a university in Ontario that is authorized to engage in an activity described in section 3 of the Post-secondary Education Choice and Excellence Act, 2000,
ii. the board of governors of a college established under the Ontario Colleges of Applied Arts and Technology Act, 2002, or
iii. a board of a public hospital within the meaning of the Public Hospitals Act.
7. Bonds, debentures, promissory notes, other evidence of indebtedness or other securities issued or guaranteed by the International Bank for Reconstruction and Development.
8. Bonds, debentures, promissory notes or other evidence of indebtedness issued or guaranteed by a supranational financial institution or a supranational governmental organization, other than the International Bank for Reconstruction and Development.
9. Asset-backed securities, as defined in subsection 50 (1) of Regulation 733 of the Revised Regulations of Ontario, 1990 (General) made under the Loan and Trust Corporations Act.
10. Bonds, debentures, promissory notes or other evidence of indebtedness issued by a corporation that is incorporated under the laws of Canada or a province of Canada, the terms of which provide that the principal and interest shall be fully repaid more than five years after the date on which the City makes the investment.
11. Bonds, debentures, promissory notes or other evidence of indebtedness issued by a corporation that is incorporated under the laws of Canada or a province of Canada, the terms of which provide that the principal and interest shall be fully repaid more than one year and no later than five years after the date on which the City makes the investment.
12. Negotiable promissory notes or commercial paper, other than asset-backed securities, maturing one year or less from the date of issue, if that note or commercial paper has been issued by a corporation that is incorporated under the laws of Canada or a province of Canada.
13. Shares issued by a corporation that is incorporated under the laws of Canada or a province of Canada.
14. Bonds, debentures, promissory notes and other evidences of indebtedness of a corporation incorporated under section 142 of the Electricity Act, 1998.
15. Bonds, debentures, promissory notes or other evidence of indebtedness of a corporation if the City first acquires the bond, debenture, promissory note or other evidence of indebtedness as a gift in a will and the gift is not made for a charitable purpose.
16. Securities of a corporation, other than those described in paragraph 15, if the City first acquires the securities as a gift in a will and the gift is not made for a charitable purpose.
17. Shares of a corporation if,
i. the corporation has a debt payable to the City,
ii. under a court order, the corporation has received protection from its creditors,
iii. the acquisition of the shares in lieu of the debt is authorized by the court order, and
iv. the treasurer is of the opinion that the debt will be uncollectible by the City unless the debt is converted to shares under the court order. O. Reg. 610/06, s. 42.
Eligible investments, continued
42.1 A security is prescribed for the purposes of section 245 of the Act as a security that the City may invest in if,
(a) the City invested in the security before January 12, 2009; and
(b) the terms of the City’s continued investment in the security have been changed pursuant to the Plan Implementation Order of the Ontario Superior Court of Justice dated January 12, 2009 (Court file number 08-CL-7440) and titled “In the matter of the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 as amended and in the matter of a plan of compromise and arrangement involving Metcalfe & Mansfield Alternative Investments II Corp. et al”. O. Reg. 297/09, s. 4.
Rating
43. (1) The City shall not invest in a security under subparagraph iii, vii, viii, x, xi or xii of paragraph 1 of section 42 or under paragraph 4 or 5 of section 42 unless the bond, debenture, promissory note or evidence of indebtedness is rated,
(a) by Dominion Bond Rating Service Limited as “AA(low)” or higher;
(b) by Fitch Ratings as “AA-” or higher;
(c) by Moody’s Investors Services Inc. as “Aa3” or higher; or
(d) by Standard and Poor’s as “AA-” or higher. O. Reg. 610/06, s. 43 (1).
(2) The City shall not invest in a security under paragraph 8 of section 42 unless the security is rated,
(a) by Dominion Bond Rating Service Limited as “AAA”;
(b) by Fitch Ratings as “AAA”;
(c) by Moody’s Investors Services Inc. as “Aaa”; or
(d) by Standard and Poor’s as “AAA”. O. Reg. 610/06, s. 43 (2).
(3) The City shall not invest in an asset-backed security under paragraph 9 of section 42 that matures more than one year from the date of issue unless the security is rated,
(a) by Dominion Bond Rating Service Limited as “AAA”;
(b) by Fitch Ratings as “AAA”;
(c) by Moody’s Investors Services Inc. as “Aaa”; or
(d) by Standard and Poor’s as “AAA”. O. Reg. 610/06, s. 43 (3).
(4) The City shall not invest in an asset-backed security under paragraph 9 of section 42 that matures one year or less from the date of issue unless the security is rated,
(a) by Dominion Bond Rating Service Limited as “R-1(high)”;
(b) by Fitch Ratings as “F1+”;
(c) by Moody’s Investors Services Inc. as “Prime-1”; or
(d) by Standard and Poor’s as “A-1+”. O. Reg. 610/06, s. 43 (4).
(5) The City shall not invest in a security under paragraph 10 of section 42 unless the security is rated,
(a) by Dominion Bond Rating Service Limited as “AA(low)” or higher;
(b) by Fitch Ratings as “AA-” or higher;
(c) by Moody’s Investors Services Inc. as “Aa3” or higher; or
(d) by Standard and Poor’s as “AA-” or higher. O. Reg. 297/09, s. 5 (1).
(6) The City shall not invest in a security under paragraph 11 of section 42 unless the security is rated,
(a) by Dominion Bond Rating Service Limited as “A” or higher;
(b) by Fitch Ratings as “A” or higher;
(c) by Moody’s Investors Services Inc. as “A2”; or
(d) by Standard and Poor’s as “A”. O. Reg. 297/09, s. 5 (1).
(7) The City shall not invest in a security under paragraph 12 of section 42 unless the promissory note or commercial paper is rated,
(a) by Dominion Bond Rating Service Limited as “R-1(mid)” or higher;
(b) by Fitch Ratings as “F1+”;
(c) by Moody’s Investors Services Inc. as “Prime-1”; or
(d) by Standard and Poor’s as “A-1+”. O. Reg. 610/06, s. 43 (7).
(8) If an investment made under subparagraph 1 iii, vii, viii, x, xi or xii of section 42 or paragraph 4, 5, 8, 9, 10, 11 or 12 of section 42 falls below the standard required by this section, the municipality shall sell the investment within 180 days after the day the investment falls below the standard. O. Reg. 297/09, s. 5 (2).
(8.1) Subsection (8) does not apply with respect to an investment made by the City under paragraph 9 of section 42 on a day before the day this subsection comes into force. O. Reg. 297/09, s. 5 (3).
(9) The City shall not invest in a security under paragraph 14 of section 42 unless, at the time the investment is made and as long as it continues, the investment ranks, at a minimum, concurrently and equally in respect of payment of principal and interest with all unsecured debt of the corporation. O. Reg. 610/06, s. 43 (9).
(10) The City shall not invest in a security under paragraph 14 of section 42 unless, at the time the investment is made, the total amount of the City’s investment in debt of any corporation incorporated under section 142 of the Electricity Act, 1998 that would result after the proposed investment is made does not exceed the total amount of investment in debt, including any interest accrued on such debt, of the City in such a corporation that existed on the day before the day the proposed investment is to be made. O. Reg. 610/06, s. 43 (10).
(11) Any investment made under paragraph 14 of section 42, including any refinancing, renewal or replacement thereof, may not be held for longer than a total of 10 years from the date such investment is made. O. Reg. 610/06, s. 43 (11).
(12) Subsections (9), (10) and (11) do not prevent the City from holding or disposing of a security described in paragraph 14 of section 42 issued by a corporation incorporated under section 142 of the Electricity Act, 1998, if the City acquired the security through a transfer by-law or otherwise under that Act. O. Reg. 610/06, s. 43 (12).
(13) The City shall sell an investment described in paragraph 15 or 16 of section 42 within 90 days after ownership of the investment vests in the City. O. Reg. 610/06, s. 43 (13).
(14) Revoked: O. Reg. 297/09, s. 5 (4).
Investment limit
44. (1) The City shall not invest more then 25 per cent of the total amount in all sinking and retirement funds of the City, as estimated by its treasurer on the date of the investment, in short-term debt issued or guaranteed by the City. O. Reg. 610/06, s. 44 (1).
(2) In this section,
“short-term debt” means any debt, the terms of which provide that the principal and interest of the debt shall be fully repaid no later than 364 days after the debt is incurred. O. Reg. 610/06, s. 44 (2).
Conditions
45. (1) The City shall not invest in a security under paragraph 9 of section 42 or in a promissory note or commercial paper under paragraph 12 of section 42 unless, on the date that the investment is made,
(a) the City itself is rated, or all of the City’s long-term debt obligations are rated,
(i) by Dominion Bond Rating Service Limited as “AA(low)” or higher,
(ii) by Fitch Ratings as “AA-” or higher,
(iii) by Moody’s Investors Services Inc. as “Aa3” or higher, or
(iv) by Standard and Poor’s as “AA–” or higher; or
(b) the City has entered into an agreement with the Local Authority Services Limited and the CHUMS Financing Corporation to act together as the City’s agent for the investment in that security, promissory note or commercial paper. O. Reg. 610/06, s. 45 (1).
(2) The City shall not invest in a security under paragraph 10 or 13 of section 42 unless, on the date the investment is made, the City has entered into an agreement with the Local Authority Services Limited and the CHUMS Financing corporation to act together as the City’s agent for the investment in the security. O. Reg. 610/06, s. 45 (2).
(3) An investment made under clause (1) (b) must be made in the One Investment Program of the Local Authority Services Limited and the CHUMS Financing Corporation with,
(a) another municipality;
(b) a public hospital;
(c) a university in Ontario that is authorized to operate as described in section 3 of the Post-secondary Education Choice and Excellence Act, 2000;
(d) a college established under the Ontario Colleges of Applied Arts and Technology Act, 2002;
(d.1) a foundation established by a college mentioned in clause (d) whose purposes include receiving and maintaining a fund or funds for the benefit of the college;
(e) a school board; or
(f) any agent of an institution listed in clauses (a) to (e). O. Reg. 610/06, s. 45 (3); O. Reg. 297/09, s. 6; O. Reg. 53/11, s. 1.
School purposes
46. The City shall not invest in a security issued or guaranteed by a school board or similar entity unless the money raised by issuing the security is to be used for school purposes. O. Reg. 610/06, s. 46.
Canadian dollars
47. (1) The City shall not invest in a security that is expressed or payable in any currency other than Canadian dollars. O. Reg. 610/06, s. 47 (1).
(2) Subsection (1) does not prevent the City from continuing an investment, made before this Regulation comes into force, that is expressed and payable in the currency of the United States of America or the United Kingdom. O. Reg. 610/06, s. 47 (2).
Statement of policies and goals
48. (1) Before the City invests in a security prescribed under this Regulation, the council shall, if it has not already done so, adopt a statement of the City’s investment policies and goals. O. Reg. 610/06, s. 48 (1).
(2) In preparing the statement of the City’s investment policies and goals under subsection (1), the council shall consider,
(a) the City’s risk tolerance and the preservation of its capital;
(b) the City’s need for a diversified portfolio of investments; and
(c) obtaining legal advice and financial advice with respect to the proposed investments. O. Reg. 610/06, s. 48 (2).
(3) In preparing the statement of the City’s investment policies and goals under subsection (1) for investments made under paragraph 14 of section 42, the council shall consider its plans for the investment and how the proposed investment would affect the interest of City taxpayers. O. Reg. 610/06, s. 48 (3).
Investment report
49. (1) If the City has an investment in a security listed in section 42, the council shall require the treasurer to prepare and provide to the council, each year or more frequently as specified by the council, an investment report. O. Reg. 610/06, s. 49 (1).
(2) The investment report referred to in subsection (1) shall contain,
(a) a statement about the performance of the portfolio of investments of the City during the period covered by the report;
(b) a description of the estimated proportion of the total investments of the City that are invested in its own long-term and short-term securities to the total investment of the City and a description of the change, if any, in that estimated proportion since the previous year’s report;
(c) a statement by the treasurer as to whether or not, in his or her opinion, all investments are consistent with the investment policies and goals adopted by the City;
(d) a record of the date of each transaction in or disposal of its own securities, including a statement of the purchase and sale price of each security; and
(e) such other information that the council may require or that, in the opinion of the treasurer, should be included. O. Reg. 610/06, s. 49 (2).
(2.1) The investment report referred to in subsection (1) shall contain a statement by the treasurer as to whether any of the following investments fall below the standard required for that investment during the period covered by the report:
1. An investment described in subparagraph 1 iii, vii, viii, x, xi or xii of section 42.
2. An investment described in paragraph 4, 5, 8, 9, 10, 11 or 12 of section 42.
3. An investment described in subsection 51 (1). O. Reg. 297/09, s. 7.
(3) Upon disposition of any investment made under paragraph 14 of section 42, the council shall require the treasurer to prepare and provide to the council a report detailing the proposed use of funds realized in the disposition. O. Reg. 610/06, s. 49 (3).
Inconsistencies, treasurer’s duty
50. If an investment made by the City is, in the treasurer’s opinion, not consistent with the investment policies and goals adopted by the City, the treasurer shall report the inconsistency to the council of the City within 30 days after becoming aware of it. O. Reg. 610/06, s. 50.
Investments pre March 6, 1997
51. (1) Despite this Regulation, an investment by the City in bonds, debentures or other indebtedness of a corporation made before March 6, 1997 may be continued if the bond, debenture or other indebtedness is rated,
(a) by Dominion Bond Rating Service Limited as “AA(low)” or higher;
(b) by Fitch Ratings as “AA-” or higher;
(c) by Moody’s Investors Services Inc. as “Aa3” or higher; or
(d) by Standard and Poor’s as “AA-” or higher. O. Reg. 610/06, s. 51 (1).
(1.1) Despite subsection 43 (5), an investment in a security under paragraph 10 of section 42 made on a day before the day this subsection comes into force may be continued if the security is rated,
(a) by Dominion Bond Rating Service Limited as “A” or higher;
(b) by Fitch Ratings as “A” or higher;
(c) by Moody’s Investors Services Inc. as “A2”; or
(d) by Standard and Poor’s as “A”. O. Reg. 297/09, s. 8 (1).
(2) If the rating of an investment continued under subsection (1) or (1.1) falls below the standard required by that subsection, the City shall sell the investment within 180 days after the day the investment falls below the standard. O. Reg. 610/06, s. 51 (2); O. Reg. 297/09, s. 8 (2).
Forward rate agreements
52. (1) If the City enters into an agreement to make an investment on a future date in a security prescribed by section 42, the City may enter one or more forward rate agreements with a bank listed in Schedule I, II or III to the Bank Act (Canada) in order to minimize the cost or risk associated with the investment because of fluctuations in interest rates. O. Reg. 610/06, s. 52 (1).
(2) A forward rate agreement shall provide for the following matters:
1. Specifying a forward amount, which is the principal amount of the investment or that portion of the principal amount to which the agreement relates.
2. Specifying a settlement day, which is a specified future date.
3. Specifying a forward rate of interest, which is a notional rate of interest applicable on the settlement day.
4. Specifying a reference rate of interest, which is the market rate of interest payable on a specified future date on an acceptance issued by a bank listed in Schedule I, II or III to the Bank Act (Canada).
5. Requiring a settlement payment to be payable on the settlement day if the forward rate and the reference rate of interest are different. O. Reg. 610/06, s. 52 (2).
(3) The City shall not enter a forward rate agreement if the forward amount described in paragraph 1 of subsection (2) for the investment whose cost or risk the agreement is intended to minimize, when added to all forward amounts under other forward rate agreements, if any, relating to the same investment, would exceed the total amount of the principal of the investment. O. Reg. 610/06, s. 52 (3).
(4) The City shall not enter a forward rate agreement unless the settlement day under the agreement is within 12 months of the day on which the agreement is executed. O. Reg. 610/06, s. 52 (4).
(5) The City shall not enter a forward rate agreement if the settlement payment described in paragraph 5 of subsection (2) exceeds the difference between the amount of interest that would be payable on the forward amount calculated at the forward rate of interest for the period for which the investment was made and the amount that would be payable calculated at the reference rate of interest. O. Reg. 610/06, s. 52 (5).
(6) The City shall not enter a forward rate agreement except with a bank listed in Schedule I, II or III to the Bank Act (Canada) and only if the bank’s long-term debt obligations on the day the agreement is entered are rated,
(a) by Dominion Bond Rating Service as “A(high)” or higher;
(b) by Fitch Ratings as “A+” or higher;
(c) by Moody’s Investors Service Inc. as “A1” or higher; or
(d) by Standard and Poor’s as “A+” or higher. O. Reg. 610/06, s. 52 (6).
Statement of policies and goals
53. (1) Before the City passes a by-law authorizing a forward rate agreement, the council shall adopt a statement of policies and goals relating to the use of forward rate agreements. O. Reg. 610/06, s. 53 (1).
(2) The council shall consider the following matters when preparing the statement of policies and goals:
1. The types of investments for which forward rate agreements are appropriate.
2. The fixed costs and estimated costs to the City resulting from the use of such agreements.
3. A detailed estimate of the expected results of using such agreements.
4. The financial and other risks to the City that would exist with, and without, the use of such agreements.
5. Risk control measures relating to such agreements, such as,
i. credit exposure limits based on credit ratings and on the degree of regulatory oversight and the regulatory capital of the other party to the agreement,
ii. standard agreements, and
iii. ongoing monitoring with respect to the agreements. O. Reg. 610/06, s. 53 (2).
Reports to council
54. (1) If the City has any subsisting forward rate agreements in a fiscal year, the treasurer shall prepare and present to the council once in that fiscal year, or more frequently if the council so desires, a detailed report on all of those agreements. O. Reg. 610/06, s. 54 (1).
(2) The report must contain the following information and documents:
1. A statement about the status of the forward rate agreements during the period of the report, including a comparison of the expected and actual results of using the agreements.
2. A statement by the treasurer indicating whether, in his or her opinion, all of the forward rate agreements entered during the period of the report are consistent with the City’s statement of policies and goals relating to the use of forward rate agreements.
3. Such other information as the council may require.
4. Such other information as the treasurer considers appropriate to include in the report. O. Reg. 610/06, s. 54 (2).
Joint Investments With Other municipalities
Joint investments
55. The City may enter an agreement for the investment of money with any other municipality or with,
(a) a public hospital;
(b) a university in Ontario that is authorized to operate as described in section 3 of the Post-secondary Education Choice and Excellence Act, 2000;
(c) a college established under the Ontario Colleges of Applied Arts and Technology Act, 2002;
(c.1) a foundation established by a college mentioned in clause (c) whose purposes include receiving and maintaining a fund or funds for the benefit of the college;
(d) a local board as defined in the Municipal Affairs Act;
(e) a school board; or
(f) any agent of an institution described in clauses (a) to (e). O. Reg. 610/06, s. 55; O. Reg. 297/09, s. 9.
56. Omitted (provides for coming into force of provisions of this Regulation). O. Reg. 610/06, s. 56.