City council passed first reading of a borrowing bylaw Monday night, beginning a process that could end with a debt of $15.9 million and a new stretch of Ray Gibbon Drive.
Mayor Nolan Crouse is firmly in favour of borrowing the money and building the road’s third stage because interest rates and construction costs are both low.
“I think it’s the right decision,” he said. “I can’t even imagine what [could] come forward that would cause me to vote no at second reading.”
To pass a borrowing bylaw, the city must advertise prior to second reading and open up a 15-day period during which an official petition of opposition could be filed.
Council meetings are on summer hiatus until Aug. 15, when the borrowing bylaw is expected back for second reading.
Coun. Cam MacKay is more cautious because he committed during the election not to approve any money for Ray Gibbon Drive unless the city is reimbursed by the province.
“I haven’t got a problem borrowing money as long as it’s for something that will bring money back to the community and Ray Gibbon should do that because it will open up a lot of doors for business to go along there,” he said.
“But I do want to make sure we get paid back.”
Ray Gibbon Drive is eventually earmarked to become provincial Highway 2. The province has pledged to reimburse the city for any costs associated with building the road to highway standards rather than commuter road standards. To date, the province has provided $18.4 million, $14.4 million last year plus $4.4 million this spring.
Earlier this year the city spent $17 million on the land required for the third stage and expects to get this amount back from the province. That’s roughly the cost of the third stage, which is why Crouse feels now is the time to build.
City administration would like to borrow the money from a chartered bank rather than the Alberta Finance Capital Authority, the most common source of funding for municipalities.
This is an unconventional way for a municipality to borrow, said chief financial officer Dean Screpnek. It would involve a slightly higher interest rate but would allow for early payback with little or no penalty.
The city is currently at 34 per cent of its debt limit and taking on a loan of this magnitude would increase that to about 44 per cent, Screpnek said.
