City Restructures Capital Financing Program
December 16, 2020
City Council has approved a financing strategy for the construction costs of the Operations (Public Works) Facility that maximizes value to taxpayers and corrects the deficit in the accumulated surplus account created by the internal financing of the construction costs of the facility.
When originally built, the internal borrowing funding the project left a deficit in the Accumulated Surplus at the end of 2019. This deficit in the reserve account must be resolved prior to year-end 2020 to ensure compliance with legislation.
The strategy includes a financial restructuring for the construction cost of the Operations facility and for the City’s overall capital program, providing the opportunity to finalize financing and replace the interim internal borrowing that was in place for the project.
The construction cost of the facility will be funded through a combination of short-term borrowing ($3,000,000) and reserve funds ($3,600,000).
The net effect on taxation will be limited and the projects in the capital program will be prioritized to allow the loan to be paid off with annual payments over five years.
Having the facility fully-paid in five years will allow the City to continue with a modified capital plan and consider other large infrastructure projects as deemed priority. This includes projects where external granting is available but matching municipal funds are required, and major projects where long-term borrowing may be required.
Concurrently, Council has approved an updated consolidated reserve establishment bylaw to more effectively create and clarify the purposes of statutory reserves and how funds are used.