The City of Red Deer’s balance sheet carried lower than anticipated debt in 2012, say finance officials.
Dean Krejci, the city’s chief financial officer, painted a much brighter financial picture of the city than was projected when the 2013 capital budget was adopted in November.
The city’s current long-term debt is $240.6 million or $18.6 million lower than the $258 million projected in November. This puts the city in the 46 per cent range of its debt limit.
Based on these numbers the city’s debt is expected to grow to $241 million at the end of 2013. The 2012 financial statements were presented to Red Deer city council on Monday.
“The lower debt is result of slowing down borrowing on some of our projects and using some of our reserve money instead,” said Krejci. “Our reserves are pretty good especially on the self-supported side. On the tax supported side we are starting to see some reduced capital project reserves balance but we are able to off set them with our debt payment reserve.”
The city’s reserves are now sitting at $194,726 for operational and capital costs.
City Manager Craig Curtis said the city’s debt is really conservative compared to other like-sized municipalities that have petitioned the province to increase their debt limits.
“I think it is very reasonable in positioning ourselves,” said Curtis. “Groups like the Conference Board of Canada and the Alberta Chamber of Commerce have all said that it is reasonable and recommended for municipalities to use long-term debt to finance those inter-generational improvements such as our waste-water and water treatment plants.”
The expansion of the two plants make up about $200 million of the city’s existing and projected debt.
The city’s debt limit is $449 million, calculated at 1.5 times the city revenue. The city has reached about 46 per cent of its limit.
Coun. Tara Veer, who is chair of the audit committee, said this is a step in the right direction because a few years ago council had anticipated the peak debt load would reach 90 per cent in 2015. Veer noted that council has a financial sustainability plan in the works.
“That will be an important discussion that council needs to have about the balance that we have,” said Veer. “When do we incur debt and when do we have pay as you go capital projects. While the interest rates may be favourable for taking on debt, there are mixed opinions in the community.”
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In other council news:
l City council is mulling over entering into a new three-year operational agreement with the River Bend Golf and Recreation Society.
Council gave first reading to a new bylaw that may put the society back on solid financial ground. The society took out a $1.7 million loan from the city in 2004 to expand and renovate the clubhouse.
But in light of rising operational costs, poor weather and market downturn, the society has been unable to make payments for the last five years. The loan payments have been deferred since 2008.
A new agreement separates the city’s responsibility for all non-golf related amenities including Discovery Canyon and the Society’s responsibility for all things golf-related.
Under the agreement, the city would defer all debt payments for the duration of the contract (2013 to 2015) and would no longer include an annual license fee payment. The society will budget for minor capital as part of its operational budget.
Council would also agree to write off $337,800 from the 2011 and 2012 license fees and to remove the license fee component from the 2013 operating budget.
The next payment would be due in 2016.
The River Bend Golf and Recreation Area was developed in 1987 as part of the Waskasoo Park system in Red Deer. The land and amenities are owned by the city. The River Bend Golf and Recreation Society manages the operation through an agreement with the city. The bylaw will be advertised for two weeks and come back to council for consideration of second and third reading in six weeks.
l City council approved the Community Housing Advisory Committee Provincial Outreach and Support Services Grant allocations of $2,755, 212 to five projects between 2013 and 2105. Grants were allocated to the Canadian Mental Health Association - Buffalo Housing First; Central Alberta Women’s Outreach Society - Red Deer Housing Team; Central Alberta’s Safe Harbour Society for Health and Housing - Housing and Shelter Triage and Red Deer Native Friendship Society - New Beginnings Aboriginal Housing Project.
l City council gave the green light to the Queens Business Park Industrial Area Structure Plan and the West Park Community and Area Redevelopment Plan.
crhyno@www.reddeeradvocate.com