Regina council to debate whether to seek higher debt limit to pay for major projects

Regina council is being asked to approve a plan to increase the city's debt limit to finance a series of mega projects in the coming years.

A report heading to city council on Wednesday asks that council apply to the Saskatchewan Municipal Board (SMB) for an increase to the amount of debt it is allowed to possess.

Under The Cities Act, the SMB sets the debt limit for municipal governments.

With the decision to help finance the construction of the new indoor aquatics facility, the City of Regina will have up to $437 million in debt by the end of 2024.

That brings Regina very close to the current debt limit of $450 million, which was established 10 years ago. 

A significant amount of the city's debt is related to the construction of Mosaic Stadium. In 2014, Regina borrowed $200.4 million to help build the facility. The city puts approximately $11.5 million per year toward paying off Mosaic Stadium debt. It is set to be fully paid off in 2045.

According to a report heading to council, the city approaching its debt limit could make it difficult to complete infrastructure projects, or access grant funding from the provincial or federal governments if it becomes available.

The report says city has not "adequately" funded it asset maintenance program in the past. That means many buildings are in need to significant investment or are approaching the end of their life span and need to be replaced.

Meanwhile, the city's capital requirements exceed the amount of funding city council has approved.

As a result, city administration is recommending that the city look to increase its debt limit by $330 million, to a total of $780 million. 

That should allow the city to keep up with maintenance if required, while still exploring large capital projects. Those include the catalyst committee projects already endorsed by council, including a new downtown arena and a new central library, as well as other projects including relocation of the rail tracks on Ring Road and increasing wastewater treatment plant capacity.

Increasing water pressure as city grows

Another large project is up for debate on Wednesday. 

City council is being urged to increase the current approved budget of the Eastern Pressure Solution Project (EPS Project) by $53 million, for a new total of $162 million. 

The EPS Project is meant to be a long-term plan for the city's water distribution network. 

As the city continues to grow, properties in Regina's northeast are experiencing reduced water pressure.

Those issues are only expected to get worse and spread to the eastern part of the city if nothing is done to expand Regina's water system. 

The solution is to build a new storage reservoir and pumping station, as well as a new 2.1 km water supply main.

If the project is not operational by 2026, the city will have to place limits on new developments, a report says. 

The EPS Project's original budget of $109 million — approved in 2020 — is no longer feasible due to inflation and growing construction costs, city administration says .

Detailed design bumped the estimated cost of the project to $130.7 million. Further tendering of contracts has indicated the project will increase to $162.11 million if the city reduces its plans to build just one reservoir, rather than the two that were originally planned. 

That will allow the city to meet its needs for approximately 12 years before a second reservoir is required. 

City administration is recommending that, if the debt limit is increased, up to $100 million of the new debt be used to help finance the EPS Project.

Council is set to begin its meeting on Wednesday at 1 p.m. CST.