Promissory Note program

Background

In 2019, City of Ottawa started raising short-term funds through the issuance of Promissory Notes in the Canadian money market. Authorized size of the Promissory Note Program is $500,000,000. Typical issuance is in one and three month terms. Proceeds are used to: 

1. finance operational needs for a period of less than one year pending receipts of taxes and other revenues
2. manage short-term cash flow fluctuations 
3. support long-term investment strategies
4. bridge long-term funding requirements during periods of high cash flow and interest rate volatility

With City of Ottawa participating in the market, investors have access to high quality investments that are liquid and fully supported by the dealer network.

Details are outlined in the Short Term Borrowing By-law 2019-268.

Information about the program

The City of Ottawa, Ontario (the “City”), Canada’s Capital City, is a municipal corporation, created effective January 1, 2001, by amalgamating The Regional Municipality of Ottawa-Carleton and each of its eleven area municipalities, the City of Cumberland, the City of Gloucester, the Township of Goulbourn, the City of Kanata, the City of Nepean, the Township of Osgoode, the City of Ottawa, the Township of Rideau, the Village of Rockcliffe Park, the City of Vanier and the Township of West Carleton (the “Old Municipalities”), by the City of Ottawa Act, 1999, S.O. 1999, C. 14, Schedule E (the “City of Ottawa Act”). Pursuant to the City of Ottawa Act, all the assets and liabilities on December 31, 2000 including all rights, interests, approvals, status, registrations, entitlements and contractual benefits and obligations of the Old Municipalities were, on January 1, 2001, vested in and became assets and liabilities of the new City. The City is currently governed by the City of Ottawa Act and the Municipal Act, 2001, S.O. 2001, c. 25, as amended, (the “Municipal Act”), both Acts of the Province of Ontario. The City has been the capital of Canada since 1866. The City consists of 23 different wards governed by a City Council consisting of 24 elected officials – 23 Councillors and the Mayor.

City Council appointed the City Manager to provide leadership and direction to all administrative departments and staff. City Council also appointed a City Auditor who is independent from administrative staff and assists Council in its oversight of the City Manager’s administration and accountability for public funds. Additionally, a City Clerk is responsible for managing Council’s legislative process and for delivering open, accessible and impartial government to Ottawa residents, City Council and the City.

The City co-ordinates a number of shared administrative services with the National Capital Commission, a Canadian Crown corporation responsible for planning, development, conservation and improvement of Canada’s Capital Region.

The City consistently ranks in the top 20 livable Cities in the world according to the Mercer Worldwide Quality of Living Survey rankings, is known for its affordable housing, museum and recreational attractions, educational facilities, and low crime rates. The Rideau Canal, which runs through the heart of the City and constitutes a main tourist attraction, is a designated UNESCO site.

The Federal Public sector is the largest employer in the City providing a stable employment base. The local economy is also supported by its strong financial, high tech, tourism, hospital, educational and, transportation sectors.  On December 20, 2018, Moody’s Ratings Services affirmed the City’s AAA long-term issuer credit rating. The rationale supporting this rating highlighted the City’s strong financial management, budgetary performance, and outstanding liquidity position.  On December 20, 2018, Moody’s Ratings Services issued the City’s short-term issuer credit rating of Prime-1 (P-1).

The principal office of the City is located at:

Ottawa City Hall
110 Laurier Avenue
Ottawa, Ontario
Canada
K1C 5X7

More details, including the City’s recent Annual Report, may be obtained from the website at www.ottawa.ca. The materials on such website do not form part of this Information Memorandum.

Note

This Information Memorandum does not in any way obligate the City of Ottawa to accept an offer to purchase the Short Term Promissory Notes. No person has been authorized to give any information or to make any representation not contained in this Information Memorandum and, if given or made, such information or representation must not be relied upon as having been authorized. July 10, 2019

Description of the Short Term Promissory Notes

Purpose: The net proceeds from the sale of the short-term promissory notes (the Notes) will be used by the City for general operating expenditures pursuant to the provisions of the Municipal Act.

Principal: The aggregate principal amount of Notes to be outstanding at Amount: any one time is $500,000,000 in Canadian currency.

Denominations: Multiples of $1,000, subject to a minimum of $100,000, in Canadian currency.

Issuing Agent: Royal Bank of Canada (the Issuing Agent) pursuant to the Note Issuance Service Agreement dated December 20, 2018 between the City and the Issuing Agent.

Form of Notes: The Notes will be issued in “book entry only” form through participants (Participants) in CDS Clearing and Depository Services Inc. (CDS) debt clearing service, which Participants include securities brokers and dealers, and banks and trust companies. Indirect access to the CDS book entry system is also available to other institutions (Indirect Participants) that maintain custodial relationships with a Participant, either directly or indirectly.  No physical Notes will be issued and no holder of a Note will be entitled to a certificate or other instrument from the City or CDS evidencing that person’s interest in ownership of such Note, or will be shown on the records maintained by CDS except through an agent of the holder who is a Participant or an Indirect Participant of CDS.  The City will cause the Notes to be delivered to, and registered in the name of, CDS or its nominee. The City understands that each purchaser of a Note will receive a customer confirmation of purchase from the registered dealer from whom such Note is purchased in accordance with the practices and procedures of that registered dealer.  Neither the City nor the registered dealers will assume liability for:

• (a) any aspect of the records relating to the beneficial ownership of the Notes held by CDS or the payments relating thereto
• (b) maintaining, supervising, or reviewing any records relating to the Notes
• (c) any advice or representation made by or with respect to CDS including those contained in this Information Memorandum and relating to the rules governing CDS or any action taken by CDS or at the direction of its Participants

Maturities: Up to 365 days from issue date. Rates of Interest: Available upon request.

Delivery: The Notes will be delivered to the Issuing Agent, as custodian for CDS.

Payment: At maturity, payment of principal and interest will be made in accordance with CDS’s procedures.

Liquidity: The City has established credit lines and a large portfolio of liquid assets that are sufficient to meet payment of the maximum aggregate principal amount of the Notes at maturity.

Eligibility: Eligibility of the Notes for investment by certain purchasers is governed by general restrictions and prudent investment standards set out in statutes or regulations applicable to those purchasers and, in certain cases, subject to additional requirements relating to investment policies or goals.

Restrictions: The Notes will not be sold outside Canada or to any person who is not resident in Canada, or to any person purchasing for resale to, or for the account or benefit of, any person who is not resident in Canada.

Rating: The following rating was issued as of December 20, 2018 and remains unchanged as of the date hereof. It is subject to change without notice:

Moody’s Prime-1 (P-1) / AAA

Legal Opinion

The following opinion was received from WeirFoulds LLP:

We have acted as counsel to the City of Ottawa (the "City") in connection with the authorization and proposed issue and sale in all provinces of Canada by the City of negotiable short term unsecured promissory notes (the "Notes") having maturity dates not more than 365 days from their respective dates of issue and issued in multiples of $1,000, subject to a minimum of $100,000, in lawful money of Canada. The Notes will be issued in "book entry only" form only through participants in CDS Clearing and Depository Services Inc. Each Note will also have the terms more particularly described and referred to in the City's information memorandum dated July 10, 2019 (the "Information Memorandum"), with respect to the proposed sale of the Notes, of which this opinion forms part, and will be in the form of the specimen form of the Notes included in the Information Memorandum. The City has limited the aggregate principal amount of the Notes which may be outstanding at any time to $500,000,000 in Canadian currency.

We have considered such questions of law, examined such statutes and regulations, public records, certified copies or records of the City, certificates and other documents and made such investigations as we have considered necessary or desirable to enable us to express the opinions given. We have also examined and relied upon the following:

1. Temporary Borrowing By-law No. 2019-268;
2. Report to Finance and Economic Development Committee held on June 5, 2018 and to Council held on June 13, 2018, confirmed by By-law No. 2018-208;
3. Capital Financing and Debt Policy, as amended;
4. Delegation of Authority By-law No. 2018-397;
5. Information Memorandum dated July 10, 2019;
6. certificate of the Clerk of the City (City Clerk) dated July 10, 2019; and
7. certificates of the Treasurer of the City dated July 10, 2019.

In our examinations, we have assumed the legal capacity of all individuals, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to authentic original documents of all documents submitted to us as certified, notarial or true copies or facsimiles thereof and the veracity of all information contained in such documents.

We have further assumed that:

(i) there has been no cease trade order or similar order made by a court or regulatory authority having jurisdiction preventing trades in any of the City's securities; and

(ii) the City is not engaged in the business of trading in securities or holding itself out as engaging in the business of trading in securities.

We have also assumed that any agent acting in connection with the offer and sale of the Notes is registered under any applicable securities laws and has complied with such applicable securities laws and with the provisions of its registration, if applicable, in connection with such offer and sale.

Our opinions in paragraphs 1 through 4 below are limited to the laws of the provinces of Canada and the federal laws of Canada applicable therein.

With respect to the opinion expressed in paragraph 3, the enforceability of the Notes may be limited by (i) the special jurisdiction and powers of the Local Planning Appeal Tribunal over financially troubled municipalities under the Municipal Affairs Act (Ontario); (ii) equitable principles, including the principle that equitable remedies such as specific performance and injunction may only be granted in the discretion of the court of competent jurisdiction; (iii) the equitable or statutory power of the court having jurisdiction to stay proceedings before it and the execution of judgements; (iv) with respect to the rate at which interest is payable under the Notes, the Interest Act (Canada), the Criminal Code (Canada) and similar provincial legislation which limits the rate at which interest can be payable; and (v) the applicable laws regarding limitations of actions and the rate at which interest is payable on a judgment debt.

The opinions set out herein are given as at the date hereof and reliance on such opinions after the date hereof must be on the assumption that there has been no change in the law or in the facts on which the opinions are based; we expressly disclaim any obligation to advise any person to whom this opinion is addressed of any matters (including without limitation any facts or circumstances or any subsequently enacted, published or reported laws, regulations or judicial decisions having retroactive effect) which may come to our attention after the date hereof and which may affect any of the opinions set out herein.

Based upon and subject to the foregoing, we are of the opinion that:

1. The City is a body corporate existing under the Municipal Act, 2001 (Ontario).
2. The City has all necessary legal power to create and issue the Notes and all necessary actions have been taken by the City to authorize the borrowing of money through the sale of the Notes and the creation, issue and delivery of the Notes.
3. The Notes, in the specimen form set forth in the Information Memorandum when (i) duly executed, either manually or by electronic signature, by each of the Mayor and the Treasurer, and (ii) delivered by or on behalf of the City for value, will constitute valid and binding obligations of the City enforceable in accordance with their terms.
4. The City may, either directly or through agents, provided that such agents are registered in an appropriate category pursuant to applicable securities legislation that would permit them to effect, or otherwise be exempt from registration in respect of, distributions or trades in the Notes, offer and sell the Notes in each of the provinces of Canada without filing any prospectus or other documents with the applicable securities regulatory authorities in Canada.

The opinions set out in this letter are given solely for the benefit of the addressee in connection with the transactions referred to and may not, in whole or in part, be relied upon by any other person except that any dealer or selling agent appointed by the City may rely on this opinion solely for the purposes of performing its obligations under any dealer or selling agent agreement with the City in respect of the proposed issue and sale by the City of the Notes.

WeirFoulds LLP
4100-66 Wellington Street West
PO box 35TD Bank Tower
Toronto, Ontario Canada M5K 1B7
T 416 365-1110
F 416-365-1876
www.weirfoulds.com

Format for Template

Serial No.

00001

City of Ottawa

Interest bearing note/ discount

Issue

Due Date

This is a depository note subject to the depository bills and notes act.

City of Ottawa for value received will pay to CDS & CO.

On due date the sum of

$

Dollars

By-law

The full By-law is available for review.

Documentation

A Printable PDF of the Information Memorandum