Members of Strathmore Town Council recently discussed water borrowing and what it could mean for the area.
Riley Brolly, manager of financial planning and budgeting with the town presented to council on Wednesday (Jan. 22). He says the bylaw is required by town administration to comply with the Municipal Government Act (MGA).
Brolly told council that when they approved the capital budget last year in December the largest project was the Wildflower Water Reservoir upgrade for $5.45 million over two years.
"We recommended this, and council approved it because the cost of these upgrades exceed what is available to draw from reserves or to fund with incoming or expected grants," mentioned Brolly.
The bylaw says town administration can get a loan at no higher than 5.5 per cent annually on a 25-year term.
"Compared to what we're seeing today, the interest rate on a 25-year loan from the province is 5.28 per cent. This kind of represents an annual debt servicing cost of $395,000 annually to the town on this loan. Of which the funds to repay the loan must be levied on the taxpayers of the municipality," says Brolly.
Brolly added that the rates recently moved up from 5.02 per cent to 5.28 per cent.
According to Brolly, town administration has to advertise the borrowing and bring back concerns or questions to council within 30 days of the second and third reading next month.
Mayor Pat Fule asked if the borrowing is factored into the 2025 budget and Brolly said it was.
"The capital expenditure itself and the debt servicing is factored into the budget."
Deputy Mayor Brent Wiley asked administration to explain what the town plans to do with the Wildflower Water Reservoir.
Jamie Dugdale, director of infrastructure, operations, and development services says the project plans to decommission the Brentwood Reservoir and expand and complete the Wildflower Reservoir.
Councillor Denise Peterson asked about how a different interest rate would impact the budget.
"As of right now, we budgeted it at up to 5.5 per cent. We're also doing the borrowing in a way that we don't have to repay the principal in 2025. We're expecting to draw in late summer, or early fall based on the timing of construction. Most of the expense principle we're going to see in 202," said Brolly.
Councillor Jason Montgomery brought forward a motion moving that council give the first reading to the bylaw.
Montgomery also asked town administration to advertise the bylaw before the second reading.
The motion was carried.
The bylaw will head back to council at a future date.