Ontario Land Tribunal
Tribunal ontarien de l’aménagement du territoire
ISSUE DATE: January 31, 2025
CASE NO(S).: OLT-24-000994
PROCEEDING COMMENCED UNDER subsection 401 (4)(c) of the Municipal Act, 2001, S.O. 2001, c. 25.
Applicant: City of Clarence-Rockland
Subject: Request for an Exemption from the Annual Repayment Limit
Description: Application for an Exemption from the Annual Repayment Limit Impact for the Construction of a New Police Station
Municipality/UT: City of Clarence-Rockland / County of Prescott and Russell
OLT Case No.: OLT-24-000994
OLT Lead Case No.: OLT-24-000994
OLT Case Name: Application made by the City of Clarence-Rockland
Heard: January 15, 2025 by Video Hearing January 24, 2025 by Written Hearing
APPEARANCES:
| Parties | Representative |
|---|---|
| City of Clarence-Rockland (“City”) | Frédéric Desnoyers |
DECISION DELIVERED BY W. DANIEL BEST ON JANUARY 24, 2025 AND ORDER OF THE TRIBUNAL
INTRODUCTION
1The City submitted an application to the Tribunal for an exemption from the Annual Repayment Limit (“ARL”) pursuant to s. 401(4)(c) of the Municipal Act, 2001, S.O. 2001, c. 25 (“Municipal Act”) and s. 2 of Ontario Regulation 403/02: Debt and Financial Obligations (“O. Reg. 403/02”).
2A Case Management Conference (“CMC”) was held on January 15, 2024 with only the City in attendance. The City was represented by Mr. Frédéric Desnoyers, the Director of Finance and Asset Management-Treasurer. There were no others in attendance at the CMC and the Tribunal is not aware of any expressed interest in the matter.
3Mr. Desnoyers provided an overview of the need for a new Ontario Provincial Police (“OPP”) station as a Provincial and Municipal interest and for the requirement to submit a proposal to Infrastructure Ontario (“IO”) for funding as a Municipal Partnership with IO and the OPP.
4Mr. Desnoyers advised that the City was considering a “turnkey building” proposal, where the City would propose land and construct a fully completed building including base building and leasehold improvements. The OPP would lease back the building for an agreed-upon term and rental rate. He further advised that the total amount of the project was estimated to be $23.5 million ($23.5M) and that re-payment of the long-term debt would be fully recovered through long-term lease revenues from the OPP.
5Mr. Desnoyers stated that, when the City borrows funds, it must adhere to the to the ARL as prescribed by the Province. He continued, stating that the impact of the $23.5M loan on the City’s ARL would negatively affect their ability to finance other essential municipal projects, particularly those related to growth and community development.
6Mr. Desnoyers commented that, with the City’s anticipated growth, including the addition of approximately 4,400 new housing units within the next decade, it was crucial that the ability to fund other projects not be compromised.
7Based on the foregoing, the Tribunal directed that this Application would proceed via a written Hearing.
8Mr. Desnoyers agreed to provide further information as requested by the Tribunal, along with any further submissions the City wished to file, by January 24, 2025, after which a Decision would be issued.
LEGISLATIVE AUTHORITY
9The Tribunal’s authority to issue a Decision on this application arises from s. 401 of the Municipal Act and O. Reg. 403/02.
SUBMISSIONS AND EVIDENCE
10In support of the request, the City filed the following Exhibits:
Exhibit 1: Affidavit of Notice of Monique Ouellet, dated and received on December 18, 2024.
Exhibit 2: City of Clarence-Rockland Request for Exemption dated and received on September 3, 2024.
Exhibit 3: Most Recent ARL (requested by the Tribunal) received on January 17, 2025.
Exhibit 4: City of Clarence-Rockland Debt Management Policy (requested by the Tribunal) received on January 17, 2025.
Exhibit 5: Financial Justification Report (requested by the Tribunal) dated and received on January 17, 2025.
11The ARL establishes the borrowing capacity of a municipality. By regulation, the Ministry of Municipal Affairs and Housing (“MMAH”) has established that the City cannot incur debt for which the principal and interest payments exceed 25% of its annual “own source” revenue.
12Mr. Desnoyers advised that, in 2020, the City adopted a Debt Management Policy that established a self-imposed limitation of 15% of its annual “own source” revenue for debt.
13Mr. Desnoyers confirmed that the debt of the City currently sits at 10.2% (two loans were added after the 2024 ARL was prepared that showed the City’s debt at 8%).
14Mr. Desnoyers stated that without an exemption, the impact of the borrowing for the OPP station would increase debt of the City between 4% to 5%, impacting the City’s ability to borrow for future growth and development projects.
15Mr. Desnoyers provided an overview of some future roads, water, and wastewater projects estimated to cost $80M. He further stated that these projects are expected to start construction in future years, for which the City is planning to debt finance.
FINDINGS
16On the reasonable and acceptable written and oral submissions of the City, the Tribunal will grant the request.
17No concerns were raised from ratepayers or residents following the City’s public notice of this application. The City has confirmed that MMAH has not advised of a position in the matter.
18The exempted borrowing for the new OPP station that would not be included in the City’s calculated rate for ARL compliance would result in long-term lease revenues that are all but guaranteed to be paid by the Province.
19The exemption will enable the City to continue to comply with ARL requirements and its own Debt Management Policy, allowing the consideration of future commitments tied to debt financing for the delivery of municipal infrastructure to support future growth and development.
20The Tribunal accepts, on the oral submissions and the written documentation of the City that the requested exemption from the ARL results in long-term debt and financial commitments for the City requiring repayment beyond the current term of council, per s. 2.1 and 2.2 of O. Reg. 403/02. The Tribunal further accepts that these requested exemptions will enable the City’s consideration of other necessary, capital projects which may result in its ARL approaching or reaching the 25% limit. The Tribunal notes the absence of expressed concern from any person or Ministry.
21The request for the ARL exemption for a new OPP station aligns with both Provincial and Municipal interests. In addition, the ARL exemption will enable the City to meet long-term strategic objectives to support the growth and development of the City.
ORDER
22THE TRIBUNAL ORDERS that the request of the Corporation of the City of Clarence-Rockford, as summarized in paragraph [4] above, is granted such that the secured debt for a new Ontario Provincial Police station is exempt from inclusion in the calculation of its Annual Repayment Limit.
“W. Daniel Best”
W. DANIEL BEST
MEMBER
Ontario Land Tribunal
Website: www.olt.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248
The Conservation Review Board, the Environmental Review Tribunal, the Local Planning Appeal Tribunal and the Mining and Lands Tribunal are amalgamated and continued as the Ontario Land Tribunal (“Tribunal”). Any reference to the preceding tribunals or the former Ontario Municipal Board is deemed to be a reference to the Tribunal.