St. Albert is in good shape with respect to its long-term debt, Mayor Nolan Crouse says.
Figures taken from the Municipal Affairs website show St. Albert has the fourth lowest debt-per-capita ratio of cities in Alberta.
“This is probably 10 years in the making – talking about it, being debt averse, not moving ahead with libraries, arenas, pools, etc., until you really get yourself into a good position,” he said. “It’s really the better part of four councils back to back to back to back, saying the same thing.”
With a population of 64,645 in 2015 and $46.7 million in debt, the city owes approximately $723 per resident.
While Stony Plain, Spruce Grove and Lacombe can all boast better debt per capita ratios, St. Albert is well below the provincial average of $2,557 municipal debt per capita.
The larger municipalities in the province, including Edmonton and Calgary, bring up that average. Edmonton owes $2.8 billion, or $3,139 for each of its 899,447 residents. Calgary’s figure is slightly lower, with that city owing $3.4 billion – $2,784 for each of its 1.2 million residents.
St. Albert’s debt is also well below the maximum mandated by the provincial government. The debt limit regulation in the Municipal Government Acts states that the debt limit for municipalities is capped at 1.5 times its revenue, less provincial and federal capital transfers.
Calgary, Edmonton, Medicine Hat and Wood Buffalo have higher debt limits, at twice the total revenue of the municipality.
According to St. Albert’s 2015 audited financial statement, which is included in the 2015 Corporate Annual Report document, the city’s revenues excluding capital transfers were approximately $185 million. With a debt of about $47 million on the books for 2015, the city is at roughly 25 per cent of the maximum and could in theory take on an additional $138 million.
While debt is often seen as something to avoid, Crouse noted if you’re going to borrow it’s better to do it when the economy is slow, rates are lower, and the work for which a municipality is borrowing is cheaper.
He used Servus Place as an example of borrowing when costs for building and borrowing are low, compared to Ray Gibbon Drive, which he said cost more than it should have because of the construction market when that project moved forward.
“I think now’s the time to be borrowing,” he said. “We’re in a good position and we can take on borrowing right now.”
This was the message Crouse tried to convince his fellow council members of during the 2017 budget deliberations, arguing that all three planned major capital projects – a $17.8 million branch library, a $17 million ice surface and a $13.3 pool – should all have gone ahead.
In the end council voted down the pool 6-1 and the arena 4-3. Crouse was the only supporter for the pool. Councillors Tim Osborne and Wes Brodhead also supported the arena. Councillors Sheena Hughes, Cathy Heron, Cam MacKay and Bob Russell voted against both the pool and the arena.
Ultimately council opted to only move forward with the library, something Crouse said could ultimately cost the city more money in the long run.
But other council members were more gun-shy, citing concerns about an impending $310-million capital deficit over the next 10 years and the need to rein in costs to keep taxes as low as possible.
Crouse said the prospect of increasing the city’s debt wasn’t as much a concern for him, because debt taken in the right amounts at the right time is a necessary part of operating a municipality.
“What I am concerned with is that if you have a demand for an arena and you don’t borrow now but the prices take off, what happens if instead of borrowing for $20 million you have to borrow for $40 million?” Crouse said.
