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By-law No. 2002-096 CORPORATION OF THE MUNICIPALITY OF BAYHAM BY-LAW NO. 2002-96 BEING A BY-LAW TO ADOPT A POLICY ON LEASE FINANCING WHEREAS the Council of the Municipality of Bayham recognizes the need for a clear and concise set of policies concerning lease financing; AND WHEREAS the Council of the Corporation of the Municipality of Bayhamdeems it advisable that the Policy on Lease Financing be confirmed and adopted by By-law; THEREFORE THE COUNCIL OF THE CORPORATION OF THE MUNICIPALITY OF BAYHAM ENACTS AS FOLLOWS: 1. THAT effective upon passage the Policy on Lease Financing attached hereto as Schedule "A"and forming part of this By-law is hereby adopted as the policies and procedures for the management of Lease Financing for the Municipality of Bayham. 2. THAT this Lease Financing Policy By-law may be amended from time to time as directed and deemed necessary by the Council of the Corporation of the Municipality of Bayham. 3. THAT any lease financing policies previously adopted are hereby repealed; 4. AND THAT this by-law shall come into full force and effect upon final passing. READ A FIRST,ASECOND AND THIRD TIME AND FINALLY PASSED THIS 19 DAY OF DECEMBER 2002. ` d4 MAY I ' CLERK Schedule "A"to By-law 2002-96 Policy and Procedures Lease Financing Goals and Objectives 1. To ensure compliance with the Municipal Act and any regulations pertaining thereto. 2. To ensure all financing methods are considered and that the best method is determined. Policies 1. Financing leases should be considered in the following circumstances: a. When there is a need to smooth capital expenditures over several years. b. For items that are impossible or impractical to purchase outright. c. When the municipality requires equipment with rapid obsolescence (less than five years). d. Where the time frame for a required asset is very short (less than one year). 2. Prior to entering into a financing lease, the treasurer shall submit to Council for consideration a report, in accordance with the Municipal Act and any regulations pertaining thereto, assessing: a. A comparison of fixed costs, estimated costs and risks of the proposed lease with other methods of financing. b. A statement summarizing the effective rate or rates of interest included in the lease, the ability for lease payments to vary over its' life and the methods/calculations to determine such rates and variances. c. A statement summarizing any contingent payment obligations including termination provisions, equipment loss, equipment replacement options, renewal options and guarantees and indemnities. d. A summary of assumptions applicable to any possible variations in payments and contingent obligations. e. Any matters that may result in a material impact for the municipality. f. Any other matters the treasurer or council considers advisable. 3. Council shall, in accordance with the Municipal Act and any regulations pertaining thereto, obtain legal and financial advice with respect to the proposed financing lease including a second opinion if they deem necessary. 4. Council shall consider and give its' assessment of the treasurer's report and state whether, in its' opinion,the costs of financing for the proposed financing lease are lower than other methods of financing available and whether the risks associated with the financing lease are reasonable. 5. A financing lease shall be deemed"not material" in accordance with the Municipal Act and any regulations pertaining thereto, and therefore not subject to the reporting requirements detailed in sections 2, 3 &4 above, in the following circumstances: a. in emergency situations where an asset is required prior to the next regular council meeting. However, the treasurer shall report to Council on the lease as soon as practical. b. Where the annual, fixed payments for a particular lease total less than$5,000,not including operating charges. c. When the life of the asset is less than 18 months.