Council approves switching parking operations to tax-supported model

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The second debenture was borrowed in March 2011 with a repayment term of 20 years. The annual payment is $426,628.04, with the outstanding amount as of Dec. 31, 2020 being $3,580,035.86. The maturity date is March 2031.

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During consideration of the 2020 Multi-Year Budget, council requested a report from administration exploring options around refinancing the two debentures related to construction of the parkade.

According to city officials, the penalties associated with the prepayment are significantly greater than the savings recognized. The combined savings are $331,702 while the total penalties are $774,750. Refinancing with a 30 year repayment at 2.363 per cent could also be obtained.

Officials say this change allows parking policy to balance the needs of economic development with revenue generation, noting it is not reasonable to increase parking fees and fines to the extent required to cover the current and future assets.

Parking generates revenue, but officials say it’s not enough to cover the borrowing for current and future assets that are a benefit to the city overall. Officials say the debenture payments currently exceed revenues and require internal borrowing.

During a review of the Parking Reserve as part of preparations for the recommended 2021 Operating Budget, issues with sustainability of the reserve were also noted.

As a result, some change to financing parking operations was felt to be required to avoid having to incur additional amounts of internal borrowing.

Previously, parking had been treated as a self-supported operation for many years in Red Deer. Self-supported operations are expected to fund operations, including financing of capital, from user fees and other revenues with no reliance on property taxes.

There are other city functions such as recreation, transit, permitting and licensing that generate revenue and are treated as tax supported operations in Red Deer.

City officials conclude that the move to a tax-supported parking operation is hoped to provide sustainability, avoid additional internal borrowing, provide capacity for capital requirements, and to treat all parking operations consistently.