City preps to bor­row $87M

Deben­tures re­late to the next four years of con­struc­tion plans for util­ity de­part­ments

Medicine Hat News - - FRONT PAGE - COLLIN GAL­LANT cgal­[email protected]­hat­news.com Twit­ter: CollinGal­lant

A pa­rade of bor­row­ing by­laws spanned city council’s last meet­ing of 2018 and its first of 2019, and it won’t be un­til late Fe­bru­ary un­til the deben­tures, to­talling more than $87 mil­lion, will be fully ap­proved.

Those re­late to 2019-2022 gen­eral con­struc­tion pro­grams of var­i­ous util­ity de­part­ments, which put for­ward four-year busi­ness plans in early De­cem­ber.

Coun­cil­lors re­marked on the glut of fi­nanc­ing mea­sures at the Jan. 8 meet­ing this week, when 28 sep­a­rate fi­nanc­ing items were read into the record as part of first read­ing.

That fol­lowed 24 bor­row­ing bills first read on Dec. 17, but need to be ad­ver­tised for sev­eral more weeks be­fore they can be passed.

“It’s an en­tire busi­ness cy­cle that we’re ap­prov­ing all at once,” said Coun. Phil Turn­bull, chair of the util­ity com­mit­tee and who there­fore moved the by­laws.

“Our city has done a good job of re­plac­ing what’s needed, and our com­mis­sioner is al­ways look­ing at the life­span of our as­sets, de­cid­ing what can maybe wait.”

Main­te­nance, in­fra­struc­ture re­place­ment and up­grades and sev­eral spe­cial projects for gas and power dis­tri­bu­tion, san­i­tary sewer lines and potable wa­ter sup­ply are in­cluded. Not yet ready are bor­row­ing mea­sures to fund the mu­nic­i­pal con­struc­tion plans, which in­clude storm sewer re­place­ments and road work, done along­side gen­eral sewer and wa­ter lines.

That com­bined ef­fort to re­place in­fra­struc­ture ap­proach­ing 100 years in some places led the city to adopt a 30-year strat­egy in 2013.

That makes up the largest sin­gle por­tion of the bud­get in most years.

Util­ity de­part­ments will spend about $10 mil­lion per year in re­plac­ing ag­ing sewer and wa­ter lines, not in­clud­ing about $5.5 mil­lion in two sep­a­rate years to tackle pip­ing in down­town streets.

The largest item is $8.9 mil­lion to build a new power sub­sta­tion in the city’s far south­west quad­rant, po­ten­tially to sup­ply green­house de­vel­op­ment in the city’s ser­vice area of Cy­press County.

About $9 mil­lion in to­tal will be spent over sev­eral years to com­plete the Brier Park Sewage grav­ity by­pass.

In the category of gen­eral as­set man­age­ment, multi-year items in­clude $500,000 per year to add new util­ity ser­vice hookups, about $2 mil­lion per year to up­grade over­head and un­der­ground elec­tri­cal lines, and $130,000 per year to im­prove the fi­bre-op­tic net­work in the city.

The bor­row­ing will in­crease the share of the city’s debt re­lated to the util­ity de­part­ment, of­ten de­scribed as “rate­sup­ported” by ad­min­is­tra­tors, be­cause it is paid off through charges on util­ity bills.

The por­tion of “tax-sup­ported” debt, re­lat­ing to mu­nic­i­pal cap­i­tal projects, is ex­pected to drop.

The 2019-2022 mu­nic­i­pal bud­get plan, ap­proved last month, states the city’s to­tal debt load would rise by about $10 mil­lion to $357 mil­lion by the end of 2019, then add an av­er­age of $12 mil­lion per year to sit at $397 mil­lion by late 2022.

The ap­par­ent dif­fer­ence comes as the city is re­tir­ing debt over this pe­riod as well.

Util­ity debt, which sits at about $300 mil­lion today, would only reach about $360 mil­lion in four years, de­spite new bor­row­ing of about $90 mil­lion.

Mu­nic­i­pal debt, to­talling about $45 mil­lion at the end of 2018, could be re­duced by $10 mil­lion, un­less the bud­get plan changes.

The items in the 2019 and 2020 util­ity bud­gets will come back to council for fur­ther read­ings and de­bate on Jan. 21. Con­sid­er­ing they in­volve spend­ing ap­proved when the util­ity busi­ness plan was passed in De­cem­ber, the deben­tures are likely to pass with­out issue.

An­other set will re­turn to council in early Fe­bru­ary to be dealt with en masse — a pro­ce­dure adopted with the 2017-18 bud­get pe­riod to cut down on po­lit­i­cal in­ter­fer­ence in spend­ing pri­or­i­ties in later bud­get pe­ri­ods.

NEWS FILE PHOTO

Con­struc­tion in 2015 for the Second Street SE Re­vi­tal­iza­tion Project is shown. City council is work­ing to ap­prove $87 mil­lion in bor­row­ing deben­tures to cover con­struc­tion plans over the next four years for util­ity de­part­ment needs.

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