City portion of the funding for the new reservoirs the primary reason city debt is up 194 per cent, annual report indicates
Bianca Bharti, Daily Herald
In 2017, the city accumulated $20.6 million in new debt, mainly fund infrastructure upgrades to the water reservoirs.
The debt increased by 194 per cent, going from $9.6 million in 2016 to $28.4 million last year.
“With the water crisis in 2016, we didn’t have enough water to sustain us for more than a couple of days,” said Cheryl Tkachuk, director of financial services for the city. So the new loans will go towards funding the expansion of two water reservoirs.
When the Husky oil pipeline burst in the North Saskatchewan River, the municipal government felt it needed to build up its reservoirs system in case another emergency were to happen again, said Tkachuk.
For the upgrades and construction of the new reservoirs, the city took out two loans from the Royal Bank of Canada. One is a $7 million loan at a 3.40 per cent interest rate and the second is a $6,553,000 loan at 3.40 per cent interest.
“Sure it’s a substantial increase but look at the value we’re getting for it,” ward 4 councillor Don Cody said. “We’re getting two new reservoirs (and) we’ve got upgrades in our water utility.”
According to the city’s annual report, the loans taken out for the construction and upgrades will be paid for by residents through water utility bills. A charge will be included on the bills for both water and sewage infrastructure.
The size of your metre determines the rate, but Tkachuk says most residents have a meter size of five-eighths. That means the scheduled charge will be $48 combined.
Todd McKay from the Canadian Taxpayers Federation raised some concerns about the debt, however. “You see that (debt) number go up a lot. You’re also seeing a lot of charges in terms of interest. That’s money that leaves the city.”
Tkachuk said after acquiring some government funding, the only option left was to take out loans to pay for the projects. “We don’t want to borrow on existing cash flow, because then we can be tight in other areas where we need it.”
The municipal government also opted for interest rate swap contracts. “This helps protect us from the interest rates that change. We hope that this will decrease our interest expense (and) protect us when we renew the loan,” she said.
Talking about how much the debt increased, Cody said “our debt is really quite low (compared) to other jurisdictions. We don’t like debt but if it’s self-liquidating, that’s fine.”
Prince Albert’s debt limit, which is set by the provincial government, is capped at $55 million. “We’re nowhere near our borrowing limits,” he said. “We’re not in bad shape at all, really.”
Also included in the debt is a $2.5 million loan to purchase seven new public transit buses, a $2.2 million loan to upgrade the irrigation system at the Cooke Municipal Golf Course and a $4.3 million loan for upgrades to the water treatment plan.
