2006 Annual Report. New Brunswick Municipal Finance Corporation

Transcription

1 2006 Annual Report New Brunswick Municipal Finance Corporation

2 2006 Annual Report Published by: Department of Finance Province of New Brunswick P.O. Box 6000 Fredericton, New Brunswick E3B 5H1 Canada May 2007 Design Management: Communications New Brunswick Printing and Binding: Printing Services, Supply and Services ISBN ISSN Printed in New Brunswick

3 2006 Annual Report New Brunswick Municipal Finance Corporation

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5 Table of Contents New Brunswick Municipal Finance Corporation Legislation 1 Purpose 1 Administration. 1 Directors 2 Officers of the Corporation 2 Fiscal Year 2 Protection For Investors 3 Financing Activity in Schedules of Loans to Municipalities Cities and Towns.. 6 Schedules of Loans to Municipalities Villages. 7 Schedules of Loans to Municipalities Villages Continued. 8 Schedules of Loans to Municipalities Municipal Enterprises. 9 Financial Statements.. 11 Balance Sheet.. 13 Statement of Income and Retained Earnings. 14 Statement of Cash Flows 15 Summary of significant accounting policies 16 Loans to municipalities and municipal enterprises 16 Debenture debt 17 Financial instruments 18

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7 New Brunswick Municipal Finance Corporation Legislation The New Brunswick Municipal Finance Corporation was established by the New Brunswick Municipal Finance Corporation Act, Chapter N-6.2 of the Acts of New Brunswick 1982, (the Act ) which came into force on February 1, Purpose The purpose of the Corporation is to provide financing for municipalities and municipal enterprises through a central borrowing authority. The Act prohibits a municipality or municipal enterprise from issuing and selling securities other than to the New Brunswick Municipal Finance Corporation, the Government of Canada, the Province of New Brunswick, a reserve fund established by the municipality under section 90 or 189 of the Municipalities Act, a sinking fund established by the municipality under section 7 of the Municipal Debenture Act or a trust fund of which it is a trustee. An exception is made in the case of securities having a term to maturity of less than one year, which a municipality or municipal enterprise may issue to a chartered bank, trust company or credit union as evidence of a temporary loan. Administration The Corporation consists of five directors appointed by the Lieutenant-Governor in Council. 1

8 Directors John E. Mallory John Dicaire Deputy Minister Finance Province of New Brunswick Assistant Deputy Minister Treasury Division Province of New Brunswick C. Ann Flewelling Director Corporate Policy & Risk Management Treasury Division Province of New Brunswick Bonny Hoyt-Hallett Michael Beal Deputy Minister Local Government Province of New Brunswick Treasurer Town of Sackville Officers of the Corporation John E. Mallory John Dicaire Dan Rae President Vice President Secretary-Treasurer Administration is provided by officials of the Province of New Brunswick. Fiscal Year The fiscal year of the Corporation is from January 1 to December 31. 2

9 Protection For Investors Before applying to the Corporation for financing of a capital expense, all municipalities and municipal enterprises, except for the City of Saint John, must obtain the prior approval of the Minister of Local Government to incur the capital expense under the terms of the Municipal Capital Borrowing Act. Under the provisions of the Act, the Lieutenant-Governor in Council may guarantee the payment of the principal, premium, if any, and interest on any securities issued by the Corporation. The Act also obligates the Minister of Local Government to pay to the Corporation, upon request, any amounts payable to the Corporation by municipalities or municipal enterprises that are in default. 3

10 Financing Activity in 2006 In 2006, the Corporation sold two issues of debentures, which were guaranteed as to principal and interest by the Province of New Brunswick. Both issues were placed privately. The proceeds, after allowing for expenses of issue, were loaned to municipalities and municipal enterprises against the security of debentures payable to the Corporation. The details of the issues are as follows: Principal Amount $29,249,000 Series AU Date of Issue June 13, 2006 Date of Maturity June 13, Underwriters Placed privately with pricing assistance from: CIBC World Markets Inc. Registrar and Paying Agent Minister of Finance, Province of New Brunswick Year of Maturity Principal Interest $ % ,343, ,446, ,553, ,664, ,758, ,335, ,446, ,544, ,627, ,533,

11 Series AV Principal Amount $105,451,000 Date of Issue December 1, 2006 Date of Maturity December 1, Underwriters Placed privately with pricing assistance from: CIBC World Markets Inc. Registrar and Paying Agent Minister of Finance, Province of New Brunswick Year of Maturity Principal Interest $ % ,378, ,601, ,833, ,064, ,258, ,887, ,130, ,386, ,593, ,321,

12 Schedule of Loans to Municipalities Cities and Towns Principal Outstanding Dec. 31, 2005 Principal Repaid 2006 New Loans Principal Outstanding Dec. 31, 2006 Cities Bathurst $ 18,119,000 $ 5,420,000 $ 5,836,000 $ 18,535,000 Campbellton 10,758,000 1,426,000 1,353,000 10,685,000 Dieppe 45,201,000 3,754,000 18,742,000 60,189,000 Edmundston 23,717,000 3,711,000 7,600,000 27,606,000 Fredericton ,500,000 16,500,000 Miramichi 32,682,000 3,384,000 1,985,000 31,283,000 Moncton 91,948,000 14,474,000 24,405, ,879,000 Saint John 96,931,000 14,212,000 19,900, ,619,000 $ 319,356,000 $ 46,381,000 $ 96,321,000 $ 369,296,000 Towns Beresford $ 2,669,000 $ 514,000 $ 780,000 $ 2,935,000 Bouctouche 555, , ,000 Caraquet 3,403, ,000 1,370,000 4,259,000 Dalhousie 5,502, , ,000 5,143,000 GrandBay/Westfield 710, , , ,000 Grand Falls 12,973,000 1,080,000 2,370,000 14,263,000 Hampton 3,087, , ,000 2,928,000 Hartland 326,000 73, ,000 1,079,000 Lamèque 746, , , ,000 Nackawic 369,000 64, ,000 Oromocto 1,533, , ,000 Quispamsis 9,934,000 1,287,000 3,150,000 11,797,000 Richibucto 2,048, , ,804,000 Riverview 13,780,000 1,851,000 7,400,000 19,329,000 Rothesay 10,514, , ,000 9,999,000 Sackville 5,621,000 1,044, ,000 5,443,000 St. Andrews 4,148, , ,000 4,403,000 St. George 526,000 66, ,000 Saint-Leonard 1,486, , ,000 1,877,000 Saint-Quentin 1,969, , ,000 1,995,000 St. Stephen 5,112, , ,000 5,438,000 Shediac 5,964, ,000 1,135,000 6,174,000 Shippagan 3,325, , ,000 3,321,000 Sussex 47,000 47, Tracadie-Sheila 1,869, , ,000 1,579,000 Woodstock 2,517, ,000 75,000 2,159,000 $ 100,733,000 $ 13,368,000 $ 22,204,000 $ 109,569,000 6

13 Schedule of Loans to Municipalities Villages Principal Outstanding Dec. 31, 2005 Principal Repaid 2006 New Loans Principal Outstanding Dec. 31, 2006 Villages Alma $ 1,193,000 $ 24,000 $ 126,000 $ 1,295,000 Atholville 3,103, , ,000 3,040,000 Baker Brook 664,000 61,000 95, ,000 Balmoral 829, , , ,000 Bas-Caraquet 773, , , ,000 Bath 205,000 89, ,000 Belledune 3,620, , ,000 4,270,000 Bertrand 223,000 34, , ,000 Blacks Harbour 966, , ,000 Blackville 100,000 7, , ,000 Bristol 200,000 30, , ,000 Cambridge-Narrows 350,000 17, ,000 Cap-Pelé 2,204, , ,000 2,391,000 Centreville 387,000 41, ,000 Charlo 736,000 81, ,000 Chipman 783, , , ,000 Clair 431, , , ,000 Doaktown 801,000 64,000 50, ,000 Dorchester 64,000 28, , ,000 Drummond 781, , , ,000 Eel River Crossing 177,000 37,000 88, ,000 Florenceville 1,270, , ,052,000 Fredericton Junction 154,000 22, ,000 Gagetown 74,000 8, , ,000 Grande-Anse 467,000 42, ,000 Grand Manan 208,000 66, , ,000 Harvey 14,000 7, ,000 Hillsborough 383,000 39,000 75, ,000 Kedgwick 596,000 63,000 40, ,000 Lac-Baker 250,000 12,000 30, ,000 Legoulet 10,000 5, ,000 Maisonnette 43,000 10, ,000 McAdam 527,000 88, ,000 Memramcook 2,799, ,000 2,192,000 4,766,000 Minto 618, ,000 1,277,000 1,599,000 Néguac 538, , , ,000 7

14 Schedule of Loans to Municipalities Villages Continued Principal Outstanding Dec. 31, 2005 Principal Repaid 2006 New Loans Principal Outstanding Dec. 31, 2006 Villages Continued New Maryland $ 4,197,000 $ 372,000 $ 113,000 $ 3,938,000 Nigadoo 715, , , ,000 Norton 94,000 22, , ,000 Paquetville 985, , ,000 1,222,000 Perth-Andover 135, , Petitcodiac 426, , , ,000 Petit-Rocher 760,000 88, , ,000 Plaster Rock 590, , , ,000 Pointe-Verte 337,000 79,000 34, ,000 Port Elgin 131,000 30, ,000 Rexton 727,000 71, ,000 Riverside-Albert 467,000 35, ,000 Rivière-Verte 172,000 53, ,000 Rogersville 766,000 55, , ,000 Saint-André 315,000 22, ,000 Saint-Anne-de- Madawaska 399,000 57, ,000 Saint-Antoine 1,934, , ,822,000 Saint-François-de- Madawaska 563,000 47, ,000 Saint-Isidore 342,000 50, ,000 Saint-Léolin 2,000 1, ,000 Saint-Louis-de-Kent 320,000 53, ,000 1,087,000 St. Martins 135,000 22, ,000 Salisbury 414,000 26,000 1,045,000 1,433,000 Stanley 237,000 38, ,000 Sussex Corner 643,000 99, ,000 Tide Head 96,000 30, ,000 $ 42,443,000 6,771,000 13,019,000 $ 48,691,000 8

15 Schedule of Loans to Municipalities Municipal Enterprises Principal Outstanding Dec. 31, 2005 Principal Repaid 2006 New Loans Principal Outstanding Dec. 31, 2006 Municipal Enterprises The Apohaqui Sewerage Commission $ 47,000 $ 9,000 $ 0 $ 38,000 BNPP Police Commission 125,000 14, ,000 COGEDES 200,000 26, ,000 COGERNO 2,116, , ,858,000 Allardville Sewerage Commission 73,000 17, ,000 Val d Amours Sewerage Commission 604, , ,000 Fredericton Area Pollution Control Commission 375, , , ,000 Fredericton Regional Solid Waste Commission 2,068, ,000 2,276,000 3,806,000 Fundy Region Solid Waste Commission 16,539,000 1,922, ,617,000 The Nepisiguit-Chaleur Solid Waste Commission 1,319, , ,000 1,315,000 Northumberland Solid Waste Commission 68,000 68, , ,000 Rothesay Regional Joint Board of Police Commissioner 2,234,000 75, ,159,000 The Greater Shediac Sewerage Commission 231, , , ,000 Southwest Solid Waste Commission 2,976, , ,631,000 Westmorland-Albert Solid Waste Corp. 4,118, , ,725,000 Total $ 33,093,000 $ 4,380,000 $ 3,156,000 $ 31,869,000 Grand Total $ 495,625,000 $ 70,900,000 $ 134,700,000 $ 559,425,000 9

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17 FINANCIAL STATEMENTS NEW BRUNSWICK MUNICIPAL FINANCE CORPORATION 31 DECEMBER

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20 NEW BRUNSWICK MUNICIPAL FINANCE CORPORATION STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED 31 DECEMBER REVENUE Interest from municipalities and municipal enterprises $ 25,092,544 $ 24,318,087 Retained for debenture issue expenses 202, ,126 Investment income 39,216 27,849 Amortization of discount 27,997 19,098 25,361,782 24,509,160 EXPENSE Interest paid on debentures 25,125,225 24,343,625 Other expenses 206, ,293 25,331,461 24,571,918 NET INCOME (LOSS) FOR THE YEAR 30,321 ( 62,758) Retained earnings, beginning of year 991,621 1,054,379 RETAINED EARNINGS, end of year $ 1,021,942 $ 991,621 14

21 NEW BRUNSWICK MUNICIPAL FINANCE CORPORATION STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2006 CASH PROVIDED BY (USED FOR): Operating activities: Net income (loss) for the year $ 30,321 $ ( 62,758) Add (deduct) Amortization of discount ( 27,997) ( 19,098) Decrease (increase) in non-cash components of working capital (12,401) 11,249 ( 10,077) ( 70,607) Financing activities: Proceeds on sale of debentures 134,111,591 95,934,197 Funds retained for debenture issues expenses ( 202,025) ( 144,126) Principal paid on debenture debt ( 70,713,000) ( 67,295,000) 63,196,566 28,495,071 Investing activities: Loans to municipalities and municipal enterprises ( 133,909,566) ( 95,790,070) Principal repayments made by municipalities and municipal enterprises 70,900,000 67,532,000 Long term investments ( 157,690) ( 217,686) ( 63,167,256) ( 28,475,756) INCREASE (DECREASE) IN CASH 19,233 ( 51,292) Cash position, beginning of year 1,029,889 1,081,181 CASH POSITION, end of year $ 1,049,122 $ 1,029,889 15

22 NEW BRUNSWICK MUNICIPAL FINANCE CORPORATION NOTES TO FINANCIAL STATEMENTS 31 DECEMBER General The Corporation was established under the New Brunswick Municipal Finance Corporation Act, which came into force on 1 February The purpose of the Corporation is to provide financing for municipalities and municipal enterprises through a central borrowing authority. 2. Summary of significant accounting policies a) Loans to municipalities and municipal enterprises and debenture debt Loans to municipalities and municipal enterprises and debenture debt are recorded at par value. The cash value of any discount or premium arising on the issuance of debenture debt is transferred to the municipality or municipal enterprise. As the discounts or premiums on loans to municipalities and municipal enterprises and on debenture debt are of equal value, there is no effect on the financial statements. Therefore, discounts or premiums are neither recorded on the balance sheet nor amortized over the life of the respective financial instruments. b) Investments Long-term investments are recorded at par value, and adjusted for any unamortized premiums less discounts. Discounts and premiums are deferred and amortized to income on a straight-line basis over the remaining life of the related security. 3. Loans to municipalities and municipal enterprises (a) (b) Loans to municipalities and municipal enterprises are made on the security of their debentures due in annual instalments for periods up to a maximum of fifteen years. Principal payments receivable in each of the next five years are: 2007 $75,509, $67,889, $64,515, $57,479, $56,170,000 16

23 NEW BRUNSWICK MUNICIPAL FINANCE CORPORATION NOTES TO FINANCIAL STATEMENTS 31 DECEMBER Debenture debt (a) The following debenture debt outstanding at 31 December 2006 is in Canadian funds and is fully guaranteed by the Province of New Brunswick. Date of Original Series Issue Maturity Date Interest Rates Amount Outstanding "U" 29 July July 1994 to % to 8.375% $ 34,442,000 $ 606,000 * "AC" 16 Oct Oct to % to 6% 36,187,000 6,930,000 "AD" 18 Dec Dec to % to 5.75% 34,346,000 7,880,000 "AE" 25 Aug Aug to % to 5.625% 26,566,000 6,168,000 "AF" 15 Dec Dec to % to 5.5% 29,838,000 10,382,000 "AG" 11 Aug Aug to % to 5.75% 31,633,000 11,712,000 *"AH" 14 Dec Dec to % to 6.5% 33,575,000 13,709,000 "AI" 10 Aug Aug to % to 6.4% 31,887,000 14,097,000 "AJ" 19 Dec Dec to % to 6.125% 27,801,000 12,193,000 "AK" 17 July July 2002 to % to 6.2% 28,920,000 17,196,000 "AL" 30 Nov Nov to % to 5.5% 42,281,000 23,791,000 "AM" 12 July July 2003 to % to 5.75% 52,016,000 33,836,000 *"AN" 23 Dec Dec to % to 5.6% 24,625,000 15,771,000 "AO" 28 July July 2004 to % to 5.0% 41,532,000 31,417,000 "AP" 17 Dec Dec 2004 to % to 5.125% 51,873,000 38,019,000 *"AQ" 8 July July 2005 to % to 5.50% 27,040,000 22,962,000 "AR" 16 Dec Dec to % to 4.80% 78,919,000 68,739,000 *"AS" 7 July July 2006 to % to 4.35% 21,781,000 20,122,000 "AT" 7 Dec Dec to % to 4.375% 75,023,000 69,904,000 *"AU" 13 jun Jun to % to 4.70% 29,249,000 29,249,000 *"AV" 1 Dec Dec to % to 4.45% 105,451, ,451,000 $ 864,985,000 $ 560,134,000 * These debentures were sold directly to funds administered by the Province of New Brunswick. (b) Principal payments due in each of the next five years are: 2007 $75,380, $67,825, $64,521, $57,564, $56,342,000 17

24 NEW BRUNSWICK MUNICIPAL FINANCE CORPORATION NOTES TO FINANCIAL STATEMENTS 31 DECEMBER Financial Instruments Fair value The fair values of short-term investments, accrued interest receivable, investment income receivable, accounts payable and accrued interest payable are assumed to approximate their carrying amounts because of their short term to maturity. The fair value of long-term investments is $692,678. The issue and repayment terms of the loans to municipalities and municipal enterprises and the debenture debt are in most cases identical, and in each case the asset and liability is intended to be held to maturity. For these two reasons, their fair value is considered to be the equivalent of par value. Interest rate risk The Corporation s rate of interest charged on loans to municipalities and municipal enterprises is equal to its cost of borrowing, thereby eliminating interest rate risk. Credit risk Since Section 14 of the New Brunswick Municipal Finance Corporation Act provides for the recovery of any defaults by municipalities and municipal enterprises by the Corporation, an allowance for doubtful accounts is not required. It is management s opinion that the Corporation is not exposed to significant interest or credit risk arising from financial instruments. 18