CITY’S RESERVE FUNDS NOW AT $158M, DEBT RISES TO $319M

Cost of civic operations centre seen as main contributor to increase in shortfall level

A few items from Monday’s Saskatoon city council meeting, which lasted more than four hours.

RISING RESERVES

The City of Saskatoon’s reserve funds grew to $158 million in 2016, according to a City of Saskatoon report presented to council. The 2015 total was $141 million. The report describes the balance as “healthy.” Reserve funds had dropped to a low of about $50 million in 2010. The replenishment of reserve funds in 2015 marked their highest total in more than a decade.

The city sets aside reserve funds for capital projects or to offset financial risk. The reserves became an issue after the provincial government tabled a tough budget on March 22 that left the city with a $9-million hole in its 2017 budget. Premier Brad Wall urged municipalities struggling with budget shortfalls to dip into their reserves. City politicians and administrators panned this approach, saying the funds are accumulated for specific purposes and raiding them to pay for the operating budget is not a sustainable practice.

DEBT CEILING

The City of Saskatoon’s debt cracked the $300-million mark for the first time in 2016, a city report says. The debt reached $318,771,454 in 2016. It was $263,051,368 in 2015.

The main driver behind the increase is debt related to the city’s civic operations centre. Built using a P3 business model, it was officially opened in December and will house the city’s transit operations. It cost $154 million to build and the consortium that built it will also be paid $36 million to maintain and operate it for 25 years. The city estimates the P3 model will save $92.3 million over the 25-year life of the contract. It has added to the city’s debt, though, to the tune of $114.7 million in 2016.

The city’s debt has risen from $197 million in 2012, but is still well below its debt limit of $558 million, which is set by the province.

Gross debt per capita has risen to $1,198 in 2016 from $825 in 2012. The city’s debt repayment plan stretches to 2043.

CONSULTANT CONUNDRUM

Coun. Bev Dubois wants to know more about how the city arrived at its definition of a consultant. Dubois criticized as “deceiving” the city’s release of spending on consultants in 2016 using a different definition than the one used for 2015 numbers. The

narrower definition resulted in a much lower number.

Spending on consultants in 2015 was estimated at $18.63 million in a 2016 city report, but the number released for 2016 had dropped to $1.9 million. Both estimates came in response to requests from The StarPhoenix.

City hall officials say the definition was changed to more closely resemble the practice of other municipalities. Dubois served notice that she intends to seek a report from the administration on how it defines an “external consulting service” and how this compares to other municipalities. She has repeatedly questioned city spending on consultants since her return to council in the 2016 election. The city removed 10 areas from its 2015 definition of a consultant to arrive at the 2016 numbers, including audits, project management services and legal advice. Council will vote on

Dubois’s motion in August.

MUSEUM MOVING AHEAD

The Children’s Discovery Museum remains on track for its scheduled opening in early 2019 after council unanimously approved spending $1.3 million to help upgrade the former Mendel Art Gallery building. Renovations to the city-owned building will be paid for from a reserve fund for such expenditures.

Dave Hunchak, chair of the museum’s facilities committee, praised the “wisdom” of council for moving ahead with two phases of upgrades at once, which is expected to save $500,000. Council heard the museum will lease the building from the city and has not asked the city for financial assistance. “This is a partnership that makes financial sense,” Mayor Charlie Clark said.