ACCEPTABLE LETTERS OF CREDIT POLICY REVISION

TOWN OF VIEW ROYAL COUNCIL REPORT

TO: Council
DATE: July 8, 2024
FROM: D. Christenson, Director of Finance and Technology
MEETING DATE: July 16, 2024

ACCEPTABLE LETTERS OF CREDIT POLICY REVISION

RECOMMENDATION:

THAT Policy #0100-041 Acceptable Letters of Credit be revised as proposed, primarily to remove the requirement that draws on letters of credit must be presented to a financial house in Greater Victoria.

PURPOSE:

To update the policy describing acceptable letters of credit.

EXECUTIVE SUMMARY:

Letters of credit are useful to the Town to secure financial commitment or performance relating to a development. If the developer fails to deliver the related payment or complete the required works, the Town may draw on the letter of credit up to the total amount to satisfy the obligations.

The current policy includes a requirement that draws on a letter of credit must be able to be presented at a financial institution in the greater Victoria area. Over the last several years, this has proven problematic since the location of the issuing bank is typically the bank’s head office or regional banking headquarters. Most frequently, the issuing financial institution is in Vancouver, Calgary, Toronto, Montreal, or another major centre.

The proposed policy replaces the requirement to present draws to banks located in the greater Victoria area with the requirement for the issuer to accept demands for payment by registered mail or courier or in person at the issuer’s location.

The revised policy is attached with changes identified in red text.

FINANCIAL IMPLICATIONS:

None

CONCURRENCE:

ATTACHMENTS:

Policy #0100-041 Acceptable Letters of Credit-DRAFT REVISION