GENERAL COMMITTEE

 

 

 

 

 

TO:

Mayor and Members of Council

 

 

 

 

FROM:

Barb Cribbett, Treasurer  

 

 

 

 

PREPARED BY:

Fred Rich, Business Analyst

 

 

 

 

DATE OF MEETING:

2005-November-21

 

 

 

 

SUBJECT:

Municipal Funding Agreement for Federal Gas Tax Allocation

 

 

 

 

RECOMMENDATION:

 

THAT the report dated November 21, 2005 entitled “Municipal Funding Agreement for Federal Gas Tax Allocation” be received;

 

AND THAT a By-Law be enacted granting authority to the Mayor and Clerk to sign the “Municipal Funding Agreement” between the Town of Markham and the Association of Municipalities of Ontario (AMO);

 

AND THAT the Mayor and Clerk execute the Municipal Funding Agreement allowing the transfer of the Federal Gas Tax Revenues to the Town.

 

PURPOSE:

This report is to summarize the proposed Municipal Funding Agreement (MFA) between the Town and AMO and to enact a By-Law granting authority to the Mayor and Clerk to execute the agreement.

 

BACKGROUND:

 

On October 17, 2005 the report entitled “Federal Gas Tax Allocation – 2005 to 2009” was presented to General Committee. This report provided some preliminary information on the upcoming Federal Gas Tax transfer to Ontario Municipalities and informed Council that staff would report back on the Municipal Funding Agreement when it became available.

 

AMO recently provided the Town with the MFA. Included in the agreement are details regarding eligible categories, eligible costs, eligible recipient requirements and outcome indicators. A copy of the MFA has been attached.

 

 

 

The following sections summarize the MFA:

 

Agreement Term and Payment Structure

 

The agreement will be in affect until March 15, 2015, six years after the last Federal Gas Tax transfer to the Town. The agreement can be terminated by either party on two (2) years written notice. The table below identifies the minimum funds and schedule of payments over the term of the agreement.

 

 

Schedule of Payments

 

Year

July 15th

November 15th

Yearly Total

2005

 

$2,033,930.01

$2,033,930.01

2006

$1,016,965.00

$1,016,965.01

$2,033,930.01

2007

$1,355,801.94

$1,355,801.93

$2,711,603.87

2008

$1,694,638.87

$1,694,638.87

$3,389,277.74

2009

$3,389,277.74

$3,389,277.74

$6,778,555.48

Total

 

 

$16,947,297.11

 

Town Requirements

 

The agreement has the following requirements:

  1. Submit all road and bridge projects in writing to AMO prior to spending the funds.
  2. Ensure that the Funds will result in net incremental capital spending.
  3. Ensure that there is no reduction in capital funding provided by Municipalities for Municipal Infrastructure and that over the term of the Agreement capital spending on Municipal Infrastructure will not fall below the base amount*.
  4. Ensure contracts for the supply of services or materials to implement its responsibilities under this Agreement will be awarded in a way that is transparent, competitive, and consistent with value for money principles and pursuant to its adopted procurement policy.

 

*Base amount is defined as the total municipally‑funded capital spending on Municipal Infrastructure by the Recipient in the period January 1, 2000 to December 31, 2004 less monies raised under the Development Charges Act, 1997 (Ontario) and received under Infrastructure Programs.

 

Eligible Projects

 

  1. Water, drinking water supply; drinking water purification and treatment systems, drinking water distribution systems, water metering systems.
  2. Wastewater systems, including sanitary and combined sewer systems and separate storm water systems.
  3. Solid Waste, waste diversion, material recovery facilities, organics management, collection depots, waste disposal landfills, thermal treatment and landfill gas recuperation.
  4. Community Energy Systems, cogeneration or combined heat and power projects (where heat and power are produced through a single process).
  5. Local roads, bridges and tunnels, active transportation infrastructure (e.g., bike lanes) that enhance sustainability outcomes. (written plan required stating environmental benefits)

 

6.      Capacity Building Projects* including the following activities:

a.   Collaboration: building partnerships and strategic alliances; participation; and consultation and outreach.

b.   Knowledge: use of new technology; research; and monitoring and evaluation.

c.   Integration: planning, policy development and implementation (e.g., environmental management systems, life cycle assessment).

 

*Capacity Building Projects is defined as projects and activities that strengthen the ability of the Recipient to develop and implement integrated community sustainability plans.

 

Eligible Costs

 

1.        Direct costs incurred and paid by the Town under a contract for goods and services necessary for the implementation of an Eligible Project.

2.        Capital costs of acquiring, constructing, renovating or rehabilitating a tangible capital asset and any debt financing charges related thereto.

3.        Professional fees, technical personnel, consultants and contractors specifically engaged to undertake the surveying, design, engineering, manufacturing or construction of a project infrastructure asset and related facilities and structures.

4.        The costs of environmental assessments, monitoring, and follow‑up programs as required by the Canadian Environmental Assessment Act; or a provincial equivalent.

5.        The costs related to strengthening the ability of municipalities to enhance or develop Integrated Community Sustainability Plans.

6.        Employee and Equipment Costs, remote municipalities only.

7.        Administration Costs, that portion of Funds representing interest earned may be used to pay for administration costs related to the implementation of the Agreement.

8.        Discretion of Canada, Subject to the ineligible Project Costs, the eligibility of any items not listed is solely the discretion of Canada.

 

Ineligible Project Costs

 

1.      Eligible Project costs incurred before April 1, 2005

2.      Service or work that is normally provided by the Town or a related party

3.      Salaries and other employment benefits of any employees of the Town

4.      Overhead costs, specifically planning, engineering, architecture, supervision, management and other activities normally carried out by Town staff

5.      Feasibility and planning studies

6.      Taxes for which the Town is eligible for a tax rebate & all other costs eligible for rebates

7.      Costs of land or any interest therein, and related costs

8.      Leasing of equipment,   routine repair and maintenance costs

9.      Legal fees

Use of Funds

 

1.      If the Town chooses to allocate Funds to another Eligible Recipient, the transfer must be done via a By-Law.

2.      Unexpended funds may be carried over from the year received into subsequent years in a reserve fund account.

3.      If the funds are not spent within three (3) years of the year received, AMO may elect to withhold further payment.

4.      The Recipient shall expend all Funds by March 31, 2012.

5.      The use of Funds is net of the goods and services tax and net of any applicable rebates.

6.      If an Eligible Project is receiving money under an Infrastructure Program, the maximum Federal contribution limitation set out in any Infrastructure Program shall still apply.

7.      AMO may withhold payment of Funds where the Town is in default of any provisions of the Agreement.

8.      If Canada does not provide sufficient funds the AMO may terminate the Agreement.

 

Reporting Requirements

 

1.      Annual Expenditure Report, the Town shall report by March 31st on the following:

·        amounts received from AMO todate

·        amounts received from another Eligible Recipient

·        amounts transferred to another Eligible Recipient

·        amounts paid out by the Town for Eligible Projects

·        amounts held at year end by the Town, including interest

·        the progress made to date on meeting commitments and contributions

·        a list of all Eligible Projects that have been funded, indicating the location, investment category, amount of Funds, nature of the investment and expected outcomes

·        an annual Audit Statement prepared by the Town’s auditor

2.      Outcomes Report, the Town shall account for outcomes achieved and how the investments have actually contributed to the objectives of cleaner air, cleaner water and reduced greenhouse gas emissions.

3.      Capital Investment Plan, the Town agrees to undertake and complete, prior to the end of the fourth year of this Agreement, a Capital Investment Plan.

4.      Integrated Community Sustainability Plan, the Town agrees that over the life of this Agreement to develop or enhance an Integrated Community Sustainability Plan.

5.      Public Sector Accounting Board, the Town agrees that prior to March 31, 2010, the Recipient will adopt and use the accounting rules of the Public Sector Accounting Board, in accordance with provincial regulations.

 

Records and Audit

 

Separate Records, the Town shall maintain separate records and documentation for the Funds and keep all records including invoices, statements, receipts and vouchers in respect of Eligible Projects until March 31, 2018.

 

Canada may request, upon written notification and AMO has agreed, to complete and provide to Canada an audit of Eligible Project.

 

Insurance and Indemnity

 

The Town shall put in effect and maintain in full force for the term of the agreement appropriate project insurance, property, construction and errors and omissions insurance and identifies Canada and AMO as additional insured for the purposes of the Eligible Projects only.

Certificates of Insurance; throughout the term of this Agreement, the Town shall provide AMO with a valid certificate of insurance that confirms the requirements.

 

Transfer and Operation of Municipal Infrastructure

 

The Town must retain title to, and ownership of, the Municipal Infrastructure resulting from the Eligible Project for at least ten (10) years after the Eligible Project completion or the Town shall repay Canada on demand, a proportionate amount of the funds contributed by Canada.

 

Default and Termination

 

AMO may declare in writing that an event of default has occurred when the Town has not complied with any condition, undertaking or material term in this Agreement.

 

AMO may withdraw Event of Default if the Recipient, within thirty (30) days of receipt of the notice, either corrects the condition or event or demonstrate, to the satisfaction of AMO that it has taken such steps as are necessary to correct the condition.

 

Conflict of Interest

 

No member of the House of Commons, the Senate of Canada, the Legislature of the Province of Ontario or AMO Board of Directors will be admitted to any share or part of any Contract made pursuant to this Agreement or to any benefit arising therefrom.

 

DISCUSSION:

 

To initiate the transfer of Federal Gas Tax revenues, the Town must enact a By-Law authorizing the execution of the MFA and send a copy of the By-Law along with the signed and sealed MFA to the AMO, as attached. In addition, a written submission is required for each road and or bridge project indicating the sustainable outcomes of the project.  

 

Staff recommends the Town enact a By-Law granting authority to the Mayor and Clerk to sign the “Municipal Funding Agreement” between the Town of Markham and the Association of Municipalities of Ontario (AMO), and that Mayor and Clerk execute the Municipal Funding Agreement allowing the transfer of the Federal Gas Tax Revenues to the Town.

 

 

 

 

NEXT STEPS:

 

  1. Initiate the Agreement between AMO and the Town of Markham.
  2. Prepare a presentation to Committee to identify potential projects.
  3. Ensure the necessary procedures are in place to meet the reporting requirement of the agreement.

 

FINANCIAL CONSIDERATIONS:

 

A presentation will be made to General Committee regarding the allocation of Gas Tax revenues and to identify potential Gas Tax projects.

 

BUSINESS UNITS CONSULTED AND AFFECTED:

 

Legal Services and Legislative Services

 

ATTACHMENTS:

 

Municipal Funding Agreement

 

 

 

 

 

 

Barb Cribbett,

Treasurer  

 

Andy Taylor,

Commissioner, Corporate Services

 

Q:\Finance and Administration\Finance\SHARED\2005 General Committee Finance\0544- Municipal Funding Agreement for the Federal Gas Tax Allocation.doc