The approval of three motions at a special council meeting on July 5 will have an impact on the future debt burden of the City of Swift Current.
The meeting took place to consider a report about the expansion of the City Light and Power franchise area, a project to construct a multifunctional field house, and a project to develop an inclusive accessibility park in the community.
Council members debated each project in detail and concerns about the use of debt to fund these initiatives were prominent in their discussions.
Mayor Al Bridal summed up the feeling around the table with his final remark before the end of the meeting.
“It has been a tough meeting,” he said. “There's many sleepless nights that many of us have had.”
Remarks by other council members during the meeting also highlighted the strain they felt in considering these reports.
“I came in cranky this morning after reading all of this and all the debt we're going to accumulate,” Councillor Leanne Tuntland-Wiebe said. “Now I just have a really bad headache.”
Councillor Tom Christiansen said during the discussion of the field house project that he was still not sure how to vote on it, and it was going to a last-minute decision on whether to support it or not.
“I had a couple of sleepless nights trying to come to a decision on this and I'm still undecided,” he said.
The field house project resulted in the most debate and clearly presented a real dilemma for several council members with regard to whether it presented a want or a need that warrants additional debt. It resulted in a split 5-2 decision. Council members felt more confident about supporting the other two proposals and both were approved unanimously.
The meeting started with a discussion about the approval of the agreement between the City and SaskPower that will result in the expansion of the franchise area for the City Light and Power department.
City General Manager of Infrastructure and Operations Mitch Minken told the meeting the City’s electrical franchise area boundaries were originally established in 1958, and it expanded in 1986 and 1989.
The City boundaries expanded again in 2011 with the annexation of land from the adjacent Rural Municipality of Swift Current. The City has been negotiating with the provincial government and SaskPower since then to expand City Light and Power’s electrical franchise area to include the annexed land.
He referred to several benefits of expanding Light and Power’s franchise boundaries to be the same as the City boundaries. It means a single electrical utility will be responsible for service provision in the area and all Swift Current customers will receive the same policies and service levels, including during outages.
“We strive to keep our rates the same as SaskPower and we do,” he said. “Of course, because we are a much smaller area than the SaskPower staff that are in this area, we're able to maintain a little better service level, particularly during outages. We can respond quicker and those outages are shorter, and we pride ourselves also on maintaining our system in such a way that those outages are less, and because of not having the geography that some of their system is exposed to we're able to accomplish that.”
The expansion of the franchise area will not require additional equipment or staff, and it will mean approximately 400 additional customers for Light and Power. The value of this electrical franchise area has been determined to be $14.8 million plus taxes, and the City will have to pay this amount through a loan.
The annual repayment of this loan will be just under $1 million over a period of 15 years and the interest paid over the loan period will be approximately $3.2 million. However, Minken noted that 80 per cent of the loan cost will be recouped through the revenue from existing customers in the expanded franchise area and the future expansion of the customer base in the area.
Councillor Wall expressed reluctant support for the expanded electrical franchise area due to the fact that it will require more debt.
“This expansion will require borrowing, it's something which I'm very, very cautious about,” he said. “I think we have to be very careful when we owe this amount of debt, but because the Light and Power financing will be self supported by additional customers, and that's around 400 customers, I will be supporting this motion, although I'm not excited about it.”
Other council members felt this was a clear case of debt that will have long-term benefits for the community, just as the original decision by a previous council in 1958 to retain Swift Current’s own power utility has proven to be a wise decision. Councillor Ryan Plewis noted that debt was a frequent topic of discussion in last year’s municipal election.
“Debt is a tool and it's a tool that should be used in the right circumstances and it's a tool that should be used cautiously for reasons that benefit not just today's citizens, but also citizens over the entirety of the time that debt needs to be financed,” he said. “I truly believe that debt should only be used when you can see a benefit over a number of years. ... This is one of those things where we're going to see some increased expense obviously, but we're also going to see a matching increase in revenue.”
Councillor Tuntland-Wiebe said she spoke a lot about lowering debt during last year’s municipal election, but she was in favour of expanding the electrical franchise area.
“Debt is good for the right circumstances and a smart business debt is always a good thing,” she said. “So I am in favour of this. I feel it's a very good move for the City and I know I'm going to get comments about you said you're going to lower the debt. I said we would try to lower the debt, and we are doing that somewhat on another aspect. This purchase I would call an immediate revenue generating investment, because as we take on those 400 customers, we're receiving the benefit of having their payment made to the City.”
The second motion approved during the meeting will require a loan of up to $12 million to fund the municipal portion of a $25 million project to construct a multifunctional field house. However, this project will only proceed if the City’s application to the Government of Canada’s Green and Inclusive Community Buildings Program Assistance Grant is successful, and the remaining portion of the project will then be funded by the federal government.
Councillors debated whether a field house, which will accommodate soccer, volleyball, basketball and other recreational activities, is a want or a need. In the end, most felt this is a rare opportunity to receive up to $13 million in federal funding for a major project and five voted in favour of submitting the application and to fund the municipal share by debt if it proceeds.
Councillors Tuntland-Wiebe and Wall voted against this project. Wall felt this was a want and not essential, and he could not support this after already voting for additional debt to expand the electrical franchise area.
City Chief Administrative Officer Tim Marcus told the meeting the repayment cost on a $12 million loan over 25 years will be around $700,000 annually, and this will require a tax increase of about 2.5 per cent.
Mayor Bridal said the City will pay down about $5 million in existing debt in 2021, which will reduce the total debt amount to around $80 million. He decided to support the field house project due to the opportunity to receive federal funding.
“This does not come along very often where they offer us this money and whether we get chosen or not is another thing,” he said. “I am going to be voting for this, because it is something that I believe many of our citizens want. I'd like to see it here, and it is a tough choice.”
All council members expressed enthusiastic support for a project to develop an inclusive accessibility park on the site of the former Palliser Care Centre, which was demolished in February 2019.
The City is still negotiating with the provincial government to acquire this 3.7 acre parcel of land and the cost of this purchase is therefore not known yet. In the meantime, the City will submit a grant application to the Canada Community Grant Revitalization Fund.
The City will apply for the maximum grant amount of $750,000 and the federal government will pay 75 per cent, which means the City will only need to fund the remaining 25 per cent. This amount of $187,500 will have to be funded through debt or by obtaining local sponsorship.
Council members were confident the municipal share of the project can be funded through community and business support, which will make a loan unnecessary.
Councillor Tuntland-Wiebe said she will support this project, even if the City needs to obtain a loan to finance the municipal share.
“This is a need to me,” she emphasized. “We need a 100 per cent accessible playground in the city if we're going to be all inclusive and include everybody and do what we can for everyone. To me this is a need. It's bad timing for debt, but this is a debt that I can swallow.”
Councillor Plewis spoke passionately about why an inclusive playground is necessary in the city and the difference it will make to many families.
“Our community should be judged by how we look after those least fortunate that reside here,” he said. “This isn't a want, this is a need. … I don't like the fact that we don't currently have a truly accessible and barrier free park in our community. We've done our best with a lot of facilities. We've retrofitted several. We've put pour and play services in place. We've come a distance, for sure, it's better than it was in the past, but there are still barriers.”
The City already owns an adjacent one acre parcel of land that can potentially be used to offset the cost of developing the playground. Council members expressed support for an idea to make this acre available for a housing development that will accommodate eight or nine residential lots.
The playground has the potential to become a destination park that will attract families from across the region to enjoy a barrier free visit to a green space.
“I'm sure we'll have enough community support for this, because it is such a need and there is a lot of passion, not just around this council table, but around the whole city of Swift Current,” Mayor Bridal said.