A2

                         ADMINISTRATIVE REPORT


                                            Date:  April 16, 1996


     TO:       Vancouver City Council

     FROM:     Director of Finance

     SUBJECT:  Administrative Changes - Short Term Borrowing


     RECOMMENDATION

          THAT Council approve the by-law, to be presented this
          day, which amends the City's annual borrowing by-law to
          reflect the new administrative procedures for documenting
          periodic bank overdrafts.


     GENERAL MANAGER'S COMMENTS

          The General Manager of Corporate Services RECOMMENDS
          approval of the foregoing.


     BACKGROUND

     Under the Vancouver Charter, Council has the authority to
     borrow funds for operating purposes, pending collection of
     property taxes.  Typically, the City does not require borrowed
     funds, due to existing cash reserves, and the billing and
     collection of property taxes twice a year (February and July). 
     However, because the City keeps most of its funds invested,
     and not left idle in its bank account, periodic overdrafts
     occur, usually on an overnight basis when cash outflows are in
     excess of projections.

     The Vancouver Charter provides for this borrowing by way of
     promissory note or overdraft.  In the past, when these over-
     drafts have occurred, the administrative practice has been to
     cover them through the issue of promissory notes, which are
     issued in increments of $50,000.


     DISCUSSION

     In a recent operational review of our relationship with the
     City's principal banker, we noted that the present procedures
     of issuing promissory notes on every occasion of an overdraft
     was both cumbersome and costly.  While the magnitude of these
     costs was not significant, we observed that there would be
     savings in both time and interest expense by eliminating the
     process of issuing promissory notes, and having the bank
     simply calculate interest costs based on the overdraft amount
     noted on the bank statement.

     While this change is both simple and logical, the procedure of
     issuing promissory notes is spelled out in the borrowing by-
     law which Council approves each year.  Accordingly, a by-law
     amendment has been prepared to reflect the proposed procedural
     change and is before Council this day for approval, deleting
     the reference to promissory notes, and adding the provision
     for overdrafts.


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