City of Regina settles for 'incremental' increases to debt limit
Saskatchewan Municipal Board rejects city's request to increase its limit by $330M
The City of Regina has settled for a series of smaller increases to its debt limit instead of one large increase.
Council voted unanimously to change the plan on Monday as part of a small detour while debating the city's 2024 budget process. Council had previously approved a plan on June 7 to increase its debt limit by 73 per cent, to $780 million from $450 million.
According to city administration, the $330-million increase would allow the city to use debt to finance major projects.
However, that decision was rejected by the Saskatchewan Municipal Board.
"Until recently, there were no indications through the discussion with the SMB that this original ask would be denied," the report to city council reads.
Instead, the board asked the city to revise its application by $110 million to set its debt ceiling at $660 million .
The board also asked for the city to return and ask for incremental increases on a more regular basis rather than asking for large, one-time increases.
The debt limit was previously increased in 2013 to $450 million from $350 million.
Why is a debt limit increase necessary?
By the end of 2024, the city will carry up to $437 million in debt, due in part to its decision to help finance the construction of the new indoor aquatics facility.
That brings it perilously close to the city's $450-million debt limit.
The largest single item that needs to be paid off is the $200 million the city borrowed in 2014 to help build Mosaic Stadium.
The city puts approximately $11.5 million annually toward that debt. It is set to be fully paid off in 2045.
The revision requested by the municipal board "reduces the flexibility that the City will have" for large infrastructure projects, according to the report.
The city's executive director of financial strategy and sustainability, Barry Lacey, told council that the wastewater treatment plant expansion and the Eastern Pressure Solution — both already approved by city council — would be in peril if the debt limit were not increased.
Other projects on the horizon, according to the report, are a new central library, a new downtown arena, relocating the rail tracks on the Ring Road, and increasing the capacity of the city's wastewater treatment plant.
The projected cost of these projects is more than $500 million.
An increase to city's debt limit allows the city to react quickly should other sources of funding, such as the federal and provincial governments or the private sector, become available.
Council would still have to approve any new debt the city acquires within its debt limit.
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