Thursday, 26 October 2017 10:15

City re-establishing debt limit and borrowing money for capital investments

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The City of Swift Current will ask the Saskatchewan Municipal Board (SMB) to re-establish the current debt limit while over $7.3 million will have to be borrowed to finance various infrastructure investments in the 2017 budget.

Councillors approved a motion at a regular council meeting on Oct. 23 to authorize City administration to submit a request to the SMB to re-establish the debt limit at 1.7 times the average forecasted revenues for the period 2018 to 2022.
Kathy Hopfner, the City’s general manager of corporate services, said it is a routine procedure to make such a request to the SMB. The City’s current debt limit will expire on Dec. 31. The Cities Act requires that the SMB must establish each city’s debt every three years.
“Establishing a debt limit through SMB allows council to authorize borrowings without having to submit individual borrowing requests to SMB,” she said.
In 2014 the SMB set the City’s debt limit at 1.7 times the forecasted revenues and the City’s new request will maintain it at that level to make it possible to meet the proposed five-year capital budget plan.
“It’s based on an average of our five years of forecasted revenue,” she said. “So from the period 2018 to 2022 we forecast all of our revenues that we receive, whether it’s taxation, water revenue, power revenue, our other services.”
The current debt limit is $110 million, but based on the forecasted revenue for the next five years the new debt limit will increase to approximately $115 million. The City is not expecting to use the full amount of debt that will be available under this re-established limit.
“When we forecasted our capital for the next five years and included the amount of debt payments that we are making, our debt will basically stay the same within $5 million,” she said. “So we’re not expecting to use the full amount of our debt limit.”
At Dec. 31, 2016 the principal amount of debt for general government and utility operations was $60.4 million. This amount excludes the property construction line of credit, which is used by the City to fund property development.
“That debt fluctuates, depending on how many lots we’re selling and what our investments are,” she said.
The cost to service the City’s current debt for general government and utility operations will be around $4.3 million in 2017.
“We’re forecasting to pay about $5 million in 2018 in debt payments, principal only,” she said.
Councillors also approved a notice of motion during the meeting to advise the public of their intention to consider a borrowing bylaw for additional debt within general government and utility operations.
The City’s intention is to borrow $7,324,072 to fund the capital investments in the 2017 budget. The principal and interest payments for this amount are already fully funded in the 2017 budget through the tax increase that was approved in that budget.
At the end of 2017 the City’s principal amount of debt is expected to be $64.3 million, which includes this borrowed amount. The City is forecasting this general government and utility operations debt will decrease with approximately $3.741 million by the end of 2018.
“It will bring it to approximately $60 million,” Hopfner said. “The debt that we’re anticipating to take on in 2018, if the capital budget is approved, is included in the $3.741 million.”
The solid waste utility fund will receive $758,453 for the purchase of a compactor for the east landfill site, and for a storm water retention pond and slope grading at the east landfill.
The largest portion of the borrowed amount ($4,944,307) will be allocated to the general government fund. This money will be used for the phone system upgrade, to fund the extension of the Chinook Parkway into the northeast area of the city, for the rehabilitation of the South Railway Street bridge, and to pave streets and rehabilitate sidewalks at various locations in the city.

Read 274 times Last modified on Thursday, 26 October 2017 10:16
Matthew Liebenberg


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