By Sheldon Spackman

If Needed

Council approves temporary COVID-related borrowing bylaw

Jun 22, 2020 | 4:52 PM

Red Deer city council has given its final approval of a temporary, short-term borrowing bylaw to help sustain municipal operations during the COVID-19 pandemic.

On Monday, council gave second and third readings to the bylaw which allows the City to borrow up to $10 million, if needed, to help offset reduced revenues from the deferral of payments for utilities and property taxes aimed at helping residents get through the crisis.

The bylaw allows the City Manager to access the line of credit should the need arise, and would be in addition to the separate short-term borrowing of $30 million to cover bank overdrafts under normal financial circumstances.

Initially proposed as a three-year term, the bylaw did not receive support from councilors Vesna Higham and Tanya Handley.

Mayor Tara Veer proposed an amendment suggesting a one-year reduction of the term and requiring any monies borrowed under the bylaw to be paid back within two years – by June 30, 2022. Council approved the amended bylaw 8-1.

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“This meets administration’s request to accommodate the cash flow situation that we find ourselves in as a result of council’s decision, particularly with respect to property tax deferrals,” said Veer. “We’ve planned for a worst case scenario, but as Councillor (Dianne) Wytnjes noted earlier, there are many individuals who will proceed and pay prior to the September timeframe. I also think that having the two year window on the short-term borrowing responds and hopefully helps resolve some of the public concerns and confusion on whether it was actually short-term or a long-term borrowing.”

Veer’s compromise to gain consensus was supported by councillors Higham and Handley. However, Councillor Buck Buchanan voted against the amendment, feeling the term was now perhaps too short.

“This is super short-term,” said Buchanan. “This is beyond belief when it comes to short-term and that’s the reason why I can’t support it. I would go with administration’s recommendation of a three-year line of credit.”

City officials say the negative pressure on cash flow is being experienced by all municipalities across Canada as they grapple with the cost of COVID-19 on their operations and communities. They note, however, the negative impacts are being partially offset by reductions in expenses through measures such as recreational and other facility closures.

The City has been managing its operational expenses through staff layoffs and temporary work interruptions of approximately 30 per cent of its work force. There are also potential unknown additional expenses that the City may incur in support of Westerner Park and its financial challenges.

Officials say the City is advocating to both the federal and provincial governments for financial support as a result of COVID-19, along with virtually every community in Canada and Alberta.