City of Hamilton Refinancing Sin

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					                                                                         CITY WIDE
                                                                         IMPLICATIONS


                          CITY OF HAMILTON
               FINANCE AND CORPORATE SERVICES DEPARTMENT
                  Corporate Management Services - Investments

Report to: Mayor and Members             Submitted by: Joseph L. Rinaldo,
           Committee of the Whole                      General Manager

Date:         July 10, 2002              Prepared by:      Gerry T. Boychuk x4321
                                                           Joseph Spiler x4519

SUBJECT: City of Hamilton Refinancing Sinking Fund Debenture, Issue 92-085
         Maturing July 22, 2002, as per 2002–2011 Capital Budget Financing
         Plan (FCS02087) (City Wide)


RECOMMENDATION:

(a)     That report FCS02087 City of Hamilton Refinancing Sinking Fund Debenture,
        Issue 92-085, Maturing July 22, 2002, for the amount of approximately
        $27,530,000 be received for information.

(b)     That the City’s Legal Counsel be authorized to prepare and submit to Council the
        necessary By-Laws for approval.




__________________________________
Joseph L. Rinaldo, General Manager
Finance & Corporate Services




EXECUTIVE SUMMARY:

The former Region of Hamilton-Wentworth issued 10-year sinking fund debentures July
22, 1992 in the amount of $75,000,000 maturing July 22, 2002. The debenture
repayments and associated debt charges were amortized over 20 years, therefore the
outstanding principle at maturity on July 22, 2002 requires refinancing by way of a new
debenture issue. It is estimated the principal outstanding (net of sinking funds) requiring
refinancing will be approximately $27,530,000 as of July 22, 2002.
SUBJECT: City of Hamilton Refinancing Sinking Fund Debenture, Issue 92-085,
         Maturing July 22, 2002 (FCS02087) (City Wide)          Page 2 of 4



BACKGROUND:


In accordance with Bylaw 92-085, the former Region of Hamilton-Wentworth issued 10
year sinking fund debentures July 22, 1992 in the amount of $75,000,000 on behalf of
the City of Hamilton, Town of Ancaster, Hamilton and Wentworth School Boards,
Hamilton Health Sciences Corporation (H.H.S.C.) and the former Region. Table 1 below
indicates the amount of issue for each.

The costs associated with the debentures issued on behalf of the School Boards and the
H.H.H.C., including principal and interest payments, are recovered from those entities.

The debenture repayments, by way of sinking fund contributions, were amortized over 20
years, whereas the debentures were a 10-year term. Therefore at the time of maturity
on July 22, 2002, it is estimated there will be outstanding principal of approximately
$27,530,000 (refer to Table 1 below). The outstanding principal will require refinancing
by way of a new debenture issue. The amount to refinance for the City of Hamilton’s
portion is approximately $27,161,000. The balance of $369,000 is the estimated amount
to be refinanced on behalf of the Hamilton-Wentworth School Board.



TABLE 1
ESTIMATED REFINANCING AT MATURITY
JULY 22, 2002 SINKING FUND DEBENTURES
Issued July 22, 1992 - Bylaw 92-085

                                                                               ESTIMATED   ESTIMATED
                                                     ESTIMATED    ESTIMATED SINKING FUND (SURPLUS)
                                       ISSUE           TOTAL     SINKING FUND  BALANCES REFINANCING
PARTICIPANT                           AMOUNT       CONTRIBUTIONS   EARNINGS   AT MATURITY AT MATURITY
Hamilton                              22,000,000        8,100,900    4,645,344   12,746,244    9,253,756
Ancaster                               3,000,000        1,104,670      633,454    1,738,124    1,261,876
Region of Hamilton-Wentworth          39,572,500       14,571,495    8,355,812   22,927,307   16,645,193
HW Board of Ed. (Wentworth)            1,127,500          830,340      476,150    1,306,490     (178,990)
HW Board of Ed. (Hamilton)             1,300,000          478,690      274,497      753,187      546,813
Civic Hospital (Henderson)             8,000,000        6,310,782    1,689,218    8,000,000            0

Total                                 75,000,000       31,396,877   16,074,475   47,471,352   27,528,648




The Hamilton Health Sciences Corporation (H.H.S.C.) paid the former Region a total of
$11,533,110 between the years 1992 to 1997 to cover principal and interest costs for
their debenture portion ( $8 million). The monies received from the H.H.S.C. should be
sufficient to retire their portion of the debenture on July 22, 2002. Any shortfall will be
recovered from the Hamilton Health Sciences Corporation, conversely, any surplus will
SUBJECT: City of Hamilton Refinancing Sinking Fund Debenture, Issue 92-085,
         Maturing July 22, 2002 (FCS02087) (City Wide)          Page 3 of 4

be returned. The actual sinking fund balance will be calculated on or about July 22,
2002.

    TABLE 2
    HAMILTON HEALTH SCIENCES CORP.
    Sinking Fund / Deferred Revenue Account Balances
    $8 Million Debenture Issue


    Deferred Revenue Account
    Balance as of 12/31/01                              4,045,771
    Less: 2002 SF Contribution & Interest                (889,156)
    Total (before 2002 interest earned)                 3,156,615

    Sinking Fund
    Balance as of 12/31/01                              4,288,617
    Add: 2002 SF Contribution                             189,156
    Total (before 2002 interest earned)                 4,477,773

    Total Deferred Revenue and Sinking Fund             7,634,388

    Earned Interest / Additional Funding Required         365,612

    Total Debenture Redemption                          8,000,000




ANALYSIS OF ALTERNATIVES:


FINANCIAL/STAFFING/LEGAL IMPLICATIONS:

FINANCIAL
Debt costs (principal & interest) associated with the City’s portion of debt refinancing are
included in the approved 2002 Budget and the 2002 – 2011 Capital Financing Plan and
Forecasts.


POLICIES AFFECTING PROPOSAL:

Refer FCS020036, 2002 – 2011 Capital Financing Plan and Forecasts.
SUBJECT: City of Hamilton Refinancing Sinking Fund Debenture, Issue 92-085,
         Maturing July 22, 2002 (FCS02087) (City Wide)          Page 4 of 4


CONSULTATION WITH RELEVANT
DEPARTMENTS/AGENCIES:

The Hamilton-Wentworth School Board has advised the City of Hamilton to refinance the
outstanding principal amount on their behalf.


Hamilton Health Services Corp. will be advised of any surplus/deficit and monies
returned/payment requested, once the final balances are calculated on or about July 22,
2002.

CITY STRATEGIC COMMITMENT:


In summary, the refinancing of this debenture issue reflects the continuing confidence of
investors in the City of Hamilton.

				
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