special council meeting agenda

CITY OF LEDUC

SPECIAL COUNCIL MEETING AGENDA

Monday, May 11, 2020, 5:00 P.M.Council Chambers, Leduc Civic Centre

1 Alexandra Park, Leduc, Alberta

Pages

1. CALL TO ORDER

2. ADOPTION OF AGENDA

3. ITEMS FOR DISCUSSION AND RELATED BUSINESS

3.1 Select Items for Debate Except Bylaws

3.2 Vote on Items not Selected for Debate under Item 3.1

3.3 Select Bylaws for Debate

3.4 Vote on Bylaws not Selected for Debate

4. PUBLIC COMMENTARY

5. BYLAWS

5.1 Bylaw No. 1041-2019 - Borrowing Bylaw for Leduc Golf Course Facility (2nd &3rd Readings)

2 - 9

(J. Cannon / D. Melvie)

(Presentation Attached)

5.2 Bylaw No. 1050-2020 - Guarantee Bylaw - Golf Course Financing (2nd & 3rdReadings)

10 - 13

(G. Klenke)

6. PUBLIC COMMENTARY

7. ADJOURNMENT

COUNCIL REQUEST FOR DECISION

Report Number: 2020-CR-0060 Page 1 of 2

MEETING DATE: May 11, 2020

SUBMITTED BY: Jennifer Cannon, Director, Finance; Bruce Knisley, Special Projects Manager, Facilities

PREPARED BY: Gino Damo, Manager, Revenue Services

REPORT TITLE: Bylaw No. 1041-2019 Golf Course Facility Debenture Bylaw (2nd and 3rd Readings)

__________________________________________________________________________________________________

EXECUTIVE SUMMARY

The City of Leduc is proposing to borrow $3.5M to fund the replacement of the current club house, which replacement was

committed to as part of a land transfer and lease agreement between the City of Leduc and the Leduc Golf and Country

Club approved by Council on December 2, 2019. This funding supports the replacement of the current Leduc Golf and

Country Club clubhouse.

RECOMMENDATION

That Council give Bylaw No. 1041-2019 Second Reading.

That Council give Bylaw No. 1041-2019 Third Reading.

RATIONALE

On December 2, 2019, a land transfer and lease agreement (“Agreement”) between the City of Leduc and the Leduc Golf

and Country Cub was approved by Council. Part of the requirement of the Agreement is that capital improvements will be

made to course facilities. This included replacing the current club house with a structure that has the capacity to support

the golf functions and creating the opportunity for year-round activities from the site by adding a banquet space to the

facility.

This replacement is required as the current club house has been in place for a number of years and lacks the ability to

provide for high-quality year-round functions based on its design and construction methods. The new club house will

potentially be 8,000 to 10,000 square feet with a life expectancy at approximately 30 years.

STRATEGIC / RELEVANT PLANS ALIGNMENT

A City with a plan for the future.

ORGANIZATIONAL IMPLICATIONS

ADMINISTRATION:

There are no organizational implications.

FINANCIAL

The Leduc Golf and Country Cub club house project (087.174) is an approved 2020 capital project in the amount of

$3.91M. The funding allocation is as follows:

$3.5M funded through borrowing.

$410k funded through reserve.

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Report Number: 2020-CR-0060 Page 2 of 2

When borrowing occurs there is an operational impact and it is approximately $172K annually; based on a 30-year payback

period. This amount has been budgeted in the 2020 operating budget.

LEGAL

The Municipal Government Act provides that work may not commence on a project to be funded by a borrowing until the

Bylaw has passed. Once the Bylaw is passed, the City of Leduc will enter into a promissory note agreement with the

Alberta Capital Finance Authority (ACFA) or other financial institution and the project may commence. The City will have to

abide to the all the terms and conditions within the agreement.

IMPLEMENTATION / COMMUNICATIONS:

1. After first reading of Bylaw No. 1042-2019 on April 6, 2020, Administration published a notice for Bylaw No. 1041-

2019 based on estimated or tendered costs in the Leduc Rep on April 10, 2020, and April 17, 2020, as per section

606 of the Municipal Government Act (once in each period of seven days commencing with the date of the first

publication and not once in each of two successive calendar weeks). If tendered costs are more than 15% higher

than advertised costs, re-advertising may be required.

2. There was no petition for a vote submitted within the 15-day petition period after the last day of advertising in the

Leduc Rep (April 17, 2020)

It should be noted that the April 10 and 17 advertisements indicated that 2nd and 3rd readings were scheduled for

May 25. Since then, notice has been posted in the Leduc Rep and on the City’s webpage indicating that this

Agenda item was moved to May 11.

ALTERNATIVES:

That Council rejects further readings of Bylaw No.1041-2019. In that result, another source of funding would have to be

approved to complete the project since the contract for the work has been awarded.

ATTACHMENTS

1. Bylaw No.1041-2019

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CITY OF LEDUC

Bylaw No. 1041-2019

PAGE 1

GOLF COURSE FACILITY BORROWING BYLAW

Being a bylaw authorizing a borrowing to finance the

replacement of a golf course facility

WHEREAS the Municipal Government Act, R.S.A. 2000, Chapter M-26, as amended,

grants a municipality the authority to enact a bylaw to authorize the borrowing of money

for the purpose of financing capital improvements;

AND the City of Leduc plans to undertake a project to finance the replacement of a golf

course facility (the “Project”);

AND the estimated total cost of the Project is $3,910,000 (Three Million Nine-Hundred

and Ten Thousand dollars);

AND in order to construct and complete the Project, it will be necessary for the City of

Leduc to borrow up to the sum of $3,500,000 (the “Indebtedness”) by the issuance of a

debenture on the terms and conditions referred to in this Bylaw;

AND the amount of the existing debenture debt of the City of Leduc as at December 31,

2019 is $61,768,230, no part of which is in arrears;

AND the estimated lifetime of the project is thirty (30) years; and all required approvals

for the Project have been obtained and the project is in compliance with all acts and

regulations of the Province of Alberta;

THEREFORE, the Council of the City of Leduc in the Province of Alberta duly assembled,

hereby enacts as follows:

PART I: APPLICATION

1. For the purpose of undertaking and completing the Project, the sum of up to

Three Million Five-Hundred Thousand dollars ($3,500,000) be borrowed from the

Alberta Capital Finance Authority (“ACFA”) or other financial institution by way of

debenture on the credit and security of the City of Leduc at large, of which the

full amount borrowed is to be paid by the City of Leduc at large.

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CITY OF LEDUC

Bylaw No. 1041-2019

PAGE 2

2. The debentures to be issued under this bylaw shall be in any denomination not

exceeding the amount authorized by this bylaw and shall be dated having regard

to the date of the borrowing.

3. The debentures shall bear interest during the currency of the debentures, at the

interest rate fixed from time to time by the ACFA or other financial institution at a

rate not exceeding five per cent (5%) per annum, payable semi-annually.

4. The debentures shall be issued in such manner that the principal and interest will

be combined and be made payable in, as nearly as possible, equal semi-annual

installments over a period of up to thirty (30) years, in accordance with the

schedule attached and forming a part of each debenture.

5. The debentures shall be payable in lawful money of Canada at the Bank of

Montreal in the City of Leduc or at such other bank or financial institution as

Council may authorize as its banking agency during the currency of the

debenture.

6. The Mayor and a Designated Officer of the City of Leduc shall authorize such

bank or financial institution to make payments to the holder of the debentures,

on such date and in such amounts as specified in the repayment schedule

forming part of each debenture, and shall affix the corporate seal of the City of

Leduc to the debenture documents.

7. There shall be levied and raised in each year of the currency of the debentures a

rate or rates on the assessed value of all lands and improvements shown on the

assessment roll, sufficient to provide an annual tax adequate to pay the principal

and interest falling due in such year on such debentures. The said rates and taxes

are collectible at the same time and in the same manner as other rates and taxes.

8. The Indebtedness is contracted on the credit and security of the City of Leduc at

large.

9. The net amount realized by the issue and sale of debentures authorized under

this bylaw shall be applied only for the purposes of undertaking and completing

energy efficiency project.

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CITY OF LEDUC

Bylaw No. 1041-2019

PAGE 3

PART II: ENACTMENT

10. This Bylaw shall come into force and effect when passed.

READ A FIRST TIME IN COUNCIL THIS _____ DAY OF __________________, AD 2020.

READ A SECOND TIME IN COUNCIL THIS ____ DAY OF _______________, AD 2020.

READ A THIRD TIME IN COUNCIL THIS ____ DAY OF ___________________, AD 2020.

________________________________

Bob Young

MAYOR

________________________________

Sandra Davis

CITY CLERK

______________________________

Date Signed

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Presented by: Jennifer Cannon, Director, FinanceBruce Knisley, Special Projects Manager, Facilities

Golf Course Facility Replacement

Bylaw 1041-2019

Second & Third Reading

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$3.91M Golf Course Facility Replacement design would include adequate space and functionality for the following : Incorporating building accessibility and accessible features Lounge/dining area A banquet area with the capacity to sit up to 220 people Underground parking/storage Storage for golf bags Location for golf repairs Administration Offices

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2020 Budget Approved amount: $3,910,000 $3,500,000 funded through borrowing. $410,000 through reserve.

Proposed Borrowing Amount: $3,500,000

Proposed Term: Maximum of 30 Years

Proposed Annual Payment: Approximately $172,000

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Report Number: 2020--0070 Page 1 of 2

MEETING DATE: MAY 11, 2020

SUBMITTED BY: Gene Klenke, City Solicitor

PREPARED BY: Gene Klenke, City Solicitor

REPORT TITLE: Bylaw No. 1050-2020 – Guarantee Bylaw – Leduc Golf Club Financing (2nd and 3rd

Reading)

__________________________________________________________________________________________________

EXECUTIVE SUMMARY

This Report brings forward for Council’s consideration second and third readings of the Guarantee Bylaw – Leduc Golf

Club Financing (the “Bylaw”).

RECOMMENDATION

1. That Bylaw No. 1050-2020 receive Second Reading.

2. That Bylaw No. 1050-2020 receive Third Reading.

3. That the Acting City Manager be authorized to execute forms on behalf of the City as may be required to finalize

the Guarantee.

RATIONALE

As the current owner and operator of the Leduc Golf Club, the Leduc Golf & Country Club (the “Club”) has, or will soon

obtain, credit facilities through the Royal Bank of Canada (“RBC”) (namely a term loan, revolving line of credit and

corporate credit card) in the current, cumulative amount of $550,000 (“Credit Limit”). The credit facilities are secured by a

mortgage registered on title to the golf course lands.

The City has recently executed a Land Transfer and Lease Agreement (the “Agreement”) with the Club. In accordance

with the Club’s wish to retain the credit facilities beyond the transfer and throughout the lease period, the Agreement is

conditional on the City executing a Guarantee as security for repayment. Section 264 of the Municipal Government Act

(“MGA”) requires that a Guarantee be authorized by bylaw.

The Bylaw received first reading on March 23rd. The Bylaw is presented at this time for second and final readings.

STRATEGIC / RELEVANT PLANS ALIGNMENT

The City is committed to protecting its natural and built environment.

ORGANIZATIONAL IMPLICATIONS

ADMINISTRATION: Should the Bylaw receive final reading, the associated condition of sale would be removed, and transfer of the golf course

land would proceed soon thereafter.

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Report Number: 2020--0070 Page 2 of 2

RISK ANALYSIS: FINANCIAL / LEGAL: Approval of the Bylaw, and execution of the negotiated guarantee agreement, will commit the City to mitigate any future

loan default by the Club. However, as is standard practice, the guarantee agreement includes the right of the lender to

collect from the guarantor any monies owing by the creditor, notwithstanding default. Typically, this standard provision is

invoked on occasions where a lender has concern about the viability and/or solvency of a creditor.

RBC has committed to discharging the mortgage upon execution of the Guarantee.

IMPLEMENTATION / COMMUNICATIONS: Council approved the Land Transfer and Lease Agreement in late 2019. Following first reading in March, the Bylaw was

advertised as required under the MGA and no petition has been submitted. Approval of this Bylaw is one of the last

remaining steps before finalizing the arrangement to transfer the golf course lands to the City of Leduc.

ALTERNATIVES:

1. Council could choose to reject further readings of the Bylaw, in which case the condition of transfer would not be met and the present arrangement with the Club would not proceed to completion.

2. Council could choose to reject further readings and instead direct that the City work with the Club and RBC to assume the current mortgage. There is little advantage to this approach as the mortgage would remain on title and further, Council would be required to pass a Borrowing Bylaw rather than a Guarantee Bylaw.

ATTACHMENTS

1. Bylaw No. 1050-2020

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CITY OF LEDUC

Bylaw No. 1050-2020

PAGE 1

GUARANTEE BYLAW – LEDUC GOLF CLUB FINANCING

Being a bylaw authorizing a guarantee of repayment of loan

facilities related to the operation of the Leduc Golf Club

WHEREAS the Municipal Government Act, R.S.A. 2000, Chapter M-26, as amended,

allows a municipality to pass a bylaw authorizing a guarantee of repayment of loans to a

non-profit organization;

AND the Leduc Golf & Country Club (“LGCC”), a non-profit organization incorporated

under Part 9 of the Companies Act RSA 2000 c.C-21, has credit facilities, namely a

revolving line of credit, a non-revolving term loan, and a corporate credit card

(collectively, “Credit Facilities”), with the Royal Bank of Canada (“RBC”) that help finance

the LGCC’s operation of the Leduc Golf Club;

AND the Credit Facilities are currently secured by a mortgage registered against title to

the Leduc Golf Club lands (“Mortgage”);

AND the total credit available to the LGCC through the Credit Facilities is no more than

five hundred and fifty thousand dollars ($550,000);

AND through a Land Transfer and Lease Agreement the City and the LGCC have agreed

that, subject to a loan guarantee executed by the City, the LGCC will transfer the Leduc

Golf Club lands to the City while continuing to operate the golf course and related

amenities on the lands under a long-term lease;

AND the amount of the proposed loan guarantee will not cause the City to exceed its

debt limit;

AND RBC has pledged to discharge the Mortgage following the execution of the

Guarantee;

NOW THEREFORE, the Council of the City of Leduc in the Province of Alberta duly

assembled, hereby enacts as follows:

1. The City may enter into a Guarantee agreement with Royal Bank of Canada to

guarantee the repayment of Credit Facilities totaling no more than five hundred

and fifty thousand dollars ($550,000).

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CITY OF LEDUC

Bylaw No. 1050-2020

PAGE 2

2. The annual rate of interest applied to the Credit Facilities and the Guarantee

thereof shall not exceed RBC Prime Rate plus five percent (5%).

3. The City will utilize cash reserves or funds raised through taxation to honor the

principal and interest payments owing under the Credit Facilities should the LGCC

become unable to meet the terms thereof.

READ A FIRST TIME IN COUNCIL THIS _____ DAY OF __________________, AD 2020.

READ A SECOND TIME IN COUNCIL THIS ____ DAY OF _______________, AD 2020.

READ A THIRD TIME IN COUNCIL THIS ____ DAY OF ___________________, AD 2020.

________________________________

MAYOR

________________________________

CITY CLERK

______________________________

Date Signed

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special council meeting agenda

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