City commits to long-term debt repayment with approval of two borrowing bylaws

Posted on 22 December 2021 by Ryan Dahlman

The City of Swift Current committed to the 20-year repayment of a total of $16.4 million in debt with the approval of two borrowing bylaws during a regular council meeting, Dec. 13.

The borrowed funds are required to finance two projects within the City’s general government and utility operations.

Bill No. 7 – 2021 is a borrowing bylaw for an amount of $1,642,012 to fund a capital project at the water treatment plant. The residual management project will ensure that clarifier sludge and chlorinated filter backwash water from the water treatment plant are collected and disposed in accordance with updated environmental standards that do not allow direct discharge into the Swift Current Creek.

This borrowed amount will be repaid in quarterly installments of $26,809 in the years 2022 to 2042 at an interest rate of about 3.03 per cent. Funds from the water and wastewater utility fund and general government operations will be used to repay this debt.

Bill No. 8 – 2021 is a borrowing bylaw for an amount of $14.8 million to expand the City Light and Power franchise area. This is the value of the electrical franchise area in an agreement reached between the City and SaskPower.

City boundaries expanded in 2011 with the annexation of land from the adjacent Rural Municipality of Swift Current. The City has been in extensive negotiations with SaskPower to expand City Light and Power’s electrical franchise area to include the annexed land.

This borrowed amount will be repaid in quarterly installments of $241,644 in the years 2022 to 2042 at an interest rate of approximately 3.03 per cent. Funds from general government operations and the income from approximately 400 accounts in the expanded franchise area will be used to repay this debt.

The City expects to receive about $775,000 in additional revenue from these new customers. This will be lower than the annual repayment amount of $966,576. Mayor Al Bridal said during a media briefing after the council meeting there are other funds available for this repayment through reduced spending on downtown upgrades.

“We knew that the new 400 customers wouldn’t cover it all, but instead of spending $500,000 or $600,000 downtown, we could spend a couple of $100,000 and we would still have a couple of $100,000 we could put towards the debt and we would still be ahead of the game by a couple of $100,000,” he explained.

He anticipated that future growth in the number of Light and Power customers in the expanded franchise area will make it possible to fund most of the repayment amount from this income source.

“We were really hoping that the new customers would cover it completely, but as time goes on in another year or two with some more customers coming online, we will increase that customer base,” he said. “For right now, we’re going to have to dip into this money that we’re using downtown, but likely within three or four or five years there’ll be enough new customers that all the profits from the new customers and the new franchise area will pay for this.”

Bridal received mixed reactions since the City announced its intentions during a previous council meeting to proceeds with these borrowing bylaws, but he felt the arguments in favour of the debt is convincing.

“I’ve heard some pros and cons, and when I hear the cons, I tell them the reason we’ve done this,” he said. “It’s a business decision.”

The expansion of the Light and Power franchise area will have long-term benefits to the City after the repayment of this debt in 20 years.

“With no other customers, it’s going to be putting well over $1 million dollars extra into the coffers and in 20 years, when we’ve gained other customers and with increases in electrical rates, it’s going to be $2 million or $3 million extra a year profit that would have just gone to SaskPower and not to us. So once I explain that to people, strictly a business decision, I haven’t had any real negative from that.”

In the case of the residual management project, the City had to proceed with this expense due to the need to comply with environmental standards. The City was able to reduce the borrowing amount by reallocating $907,988 from the Light and Power dividend to the water and wastewater utility.

“So we took a loan for $1.6 million instead of $2.5 million, and that just shows you right there what a great utility it is,” he said.

City budget details scheduled for release early in 2022:

Swift Current ratepayers will have to wait until early in 2022 to hear if the next City budget will have any impact on their pockets.

Bridal said staffing shortages in the City’s finance department and time spent by the City to create COVID-19 related policies and procedures for employees caused some delays in the budget planning process.

“We’re hoping to have a budget meeting with all of council about mid January and either the last meeting in January or the first in February to have the budget announced at that time,” he said.

He added that the 2022 City budget will still be announced earlier than the 2021 budget, which was tabled in late March.

Council to consider discretionary use application after a public hearing:

Council members approved a motion during the Dec. 13 regular council meeting to proceed with the process to consider a discretionary use application for the proposed development of a bar and lounge in an area zoned for commercial use.

The property is located at the corner of Chaplin Street East and 19th Avenue NE, across the street from the Innovation Credit Union iPlex. It was previously used by a catering business.

The applicant wants to use the property for a service station and restaurant, which will include a bar and lounge.

City General Manager of Planning and Development Marty Salberg told the meeting the service station and restaurant are already permitted uses in this zoning district, but the bar and lounge are considered to be a discretionary use.

The City’s zoning bylaw requires that any discretionary use must be approved by Council resolution after consideration of its potential impact on surrounding property. City departments and external agencies have already reviewed the application and no issues were identified. The next step will be public consultation.

The City will therefore advertise the application and also provide written notice to all property owners within a 75-metre radius of the site. A public hearing will take place at the regular council meeting on Jan. 10.

“This is to allow the applicant or other interested persons to make a presentation before council and review any verbal or written comments received for their consideration,” Salberg said.

The final step of the permit application process will take place at the Jan. 24 council meeting, when council members will either approve or reject the application. Approval might include certain conditions.

“I would certainly suspect this discretionary use wouldn’t have anybody in opposition, given that it’s mainly commercial development all around it,” he said. “But this certainly does give the ability for property owners all around it to let their voice be heard, should they so wish.”