City of Regina wants 73% debt limit hike as it plans for large projects, water infrastructure upgrades

Regina city council has signed off on a plan to increase the city's debt limit, which would clear the way for the city to finance a series of megaprojects and upgrade the city's water infrastructure in the future.

Following Wednesday's council vote in favour of the increase, the city will apply to the Saskatchewan Municipal Board — the province's administrative tribunal that deals with issues from local authorities — to increase its debt limit by 73 per cent, from $450 million to $780 million. 

"[This] is in part to provide council in the city … flexibility when opportunities present themselves to advance these critical projects," said Barry Lacey, the City of Regina's executive director of financial strategy. 

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, which has been in place for the past 10 years. 

The largest single item that needs to be paid off is the debt incurred from building Mosaic Stadium, which the city borrowed $200 million in 2014 to help build.

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. 

On Wednesday, city administration told council that approaching the debt limit could make it difficult to complete infrastructure projects or access grant funding from the provincial or federal governments if it becomes available.

A report presented to council on Wednesday says the City of Regina has not adequately funded its asset maintenance program in the past. That means many buildings are in need of significant investment, or are approaching the end of their lifespan and need to be replaced.

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

The increase to the debt limit is meant to allow the city to keep up with maintenance if required, while still exploring large capital projects.

Those include the projects already endorsed by council that were recommended by the city's catalyst committee — formed to explore how "catalyst projects" meant to generate growth, development and private funding in the city could help shape the city's downtown core.

Those include a new downtown arena and a new central library, as well as other projects such as relocation of the rail tracks on Ring Road and increasing wastewater treatment plant capacity.

Budget boost for water infrastructure project

One project is set to receive an immediate boost if the debt limit increase is increased.

On Wednesday, council raised the budget of the eastern pressure solution, or EPS, project by $53 million, for a new total of $162 million. 

That project is meant to accommodate growth by providing a long-term plan for the city's water distribution network, a report to city council says

"As the city continues to grow, properties on the northeast corner of the city are experiencing reduced water pressure and these issues will only become worse and spread along the eastern edge of the city if nothing is done to expand the water system," the report says.

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

The solution is to build a new storage reservoir and pumping station, as well as two new water supply mains, according to the report.

There was heated debate on Wednesday, though, over whether increasing the project's budget was the right course of action. 

"We work together on this council. Some of the biggest costs for infrastructure is water and wastewater," said Ward 4 Coun. Lori Bresciani. 

Wednesday's vote by council also means it will immediately apply $100 million of the debt ceiling toward the project.

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

A more detailed design bumped the estimated cost of the project to nearly $131 million. Further tendering of contracts has indicated the project will increase to just over $162 million if the city reduces its plans to build just one reservoir, rather than the two that were originally planned. 

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

Council has also asked administration to prepare a report that includes various options on how to fund the EPS project.