City proposing to add $6 million in new debt for capital investments

Swift Current City Council has given notice of motion of their intent to add just under $6 million in new debt in order to fund a series of 2020 capital investments.

Council approved the notice of motion at their June 29 meeting that they would be requesting financing proposals to borrow $5,998,821 which would be paid back over a 20 year period. The debt will finance Transportation Network Projects ($3,588,821), Facility Improvement Projects ($755,000), Water Treatment Projects ($700,000),

Rural Water Pipeline Projects ($505,000), Water Distribution Projects ($235,000), General Water/wastewater Projects ($125,000) and Wastewater Collection Projects ($90,000).

City Council had originally approved just over $9 million in new debt in the 2020 Municipal Budget to pay for their 2020 capital investment projects. However that borrowing total was decreased when a series of projects were deferred to 2021 as a result of the uncertainly of the construction season resulting from COVID-19 restrictions.

Approved projects requiring funding are:

General Government ($4,343,821): installation of a concrete floor and other upgrades at Fairview East Arena, continued Chinook Parkway development, rehabilitation of 11th Ave. N.W., replacement of expansion joints at the Chaplin Street Bridge, realignment of the Battleford Trail and Central Avenue North intersection, rehabilitation of paved streets, sidewalk and curbing.

Water and Wastewater Utility Fund ($1,150,000): replacement of a portion of the Water Treatment Plant roof, improvements to residual management at the Water Treatment Plant, North Hill Reservoir upgrade, replacement of filter turbidimeters, rehabilitation programs for hydrants, water valves, pressure reducing valves and sanitary manholes.

Rural Water Utility Fund ($505,000): upgrades to the East pipeline, land purchase for pump houses.

In presenting the borrowing report to City Council, Kari Cobler, General Manager of Corporate Services, said with interest rates dropping during the pandemic, this is an optimal time to secure long term borrowing.

She noted that it is too soon to project the potential savings until the various financial institutions return bids on the financing proposals.

“That’s really difficult to quantify at this point. We’re not sure until we do send out that RFP and we do start to receive the proposed interest rates back from any of the proponents that do bid on our debt this year,” she said. “So it is a difficult number to quantify but we are expecting it to be a little bit lower than what we would have budgeted. In December we had no way of knowing that COVID-19 would have had the financial impact that it has had.”

At the end of 2019, Swift Current was carrying a total of $60.6 million in General Government and Utility Operations debt, with a debt ceiling of $110 million which is the limit approved by the Saskatchewan Municipal Board. Additionally, the city had a debt amount for property development on the books.

With the pay down of existing debt during 2020, and the new debt funding, the City of Swift Current anticipates having a year end debt of $61,282,068, a forecast year over year increase of $634,318 in debt.