Another step was taken on Monday in the decision process to build a major sewer line needed to help kick start several developments in St. Albert.
Council’s standing committee of the whole committee voted to begin work on financing the sewer line by using $10 million from the city’s offsite levy recovery fund as a kind of down payment and borrowing the rest of the money – estimated to be about $30 million – needed to build the line.
The recommendation from the committee needs to be ratified by council at a future meeting. The motions passed on Monday include direction for staff to prepare a borrowing bylaw, which would be required for the city to take on debt for the project.
Benefits and risks to this method of funding the project were outlined by senior business analyst Stephen Graham.
“There would be no delays in land development because we could start immediately,” Graham said. As well, the initial $10 million would be available immediately from the offsite levy recovery fund, a fund with a balance of more than $21 million. The fund is powered by repayment to the city for front-ending past levy projects and would also be used to pay the debt, with more money expected to roll in from other repayments over the years.
A major benefit would be the project would have no direct impact on property taxes, Graham said.
But the risks include being dependent on the currently projected pace of development. And the money in the recoveries fund would not be available for other uses.
Graham walked council through a few scenarios, including borrowing the full $40 million and solely using the offsite levy recoveries fund to service the debt. He also looked at what would happen to repayment if expected development is slowed down to 75 per cent. In the case of borrowing the full $40 million the fund would go into the red, while it would stay in the black with only $30 million borrowed.
“The development factor is essentially out of our hands,” Graham said.
Council members had a lot of questions for staff before proceeding with a decision to move forward with the recommendations. In addition to preparing a borrowing bylaw, a policy will be developed for the offsite levy recovery fund to mitigate cash flow risks involved with this model of repayment and for staff to prepare amendments to other affected council policies.
Council was willing to move the decision process along to the next step, but some pointed out that this is not actually decision day.
“This is not a public hearing tonight, this is about a decision to proceed forward,” said Mayor Nolan Crouse.
Proceeding with the sewer line could mean more non-residential property taxes flow into the city coffers, helping the city get closer to the goal of an 80/20 residential/non-residential property tax spit.
“This is probably the best opportunity I’ve seen in front of us,” said Coun. Tim Osborne, adding he’s seen nearly every municipal council candidate talk about that 80/20 split for years.
He also pointed out that the city front-ending the sewer line is a big benefit to the development community who need the line go ahead for their projects to proceed.
Detailed designs of the sewer line, with an updated cost estimate, are expected to come back later this year before the project goes out to tender.
