Town adjusts facility repayment plan

By John Watson Local Journalism Initiative Reporter

The Town of Strathmore is adjusting its debt repayment plan for several of its facilities, which otherwise would have required significant tax increases to finance.

Amendments to the lending agreements were authorized July 28, in order to create an alternative balloon payment originally scheduled to be made starting next year.

“As we were discussing in our budget for 2026, we had identified a number of balloon payments that were coming towards the town of Strathmore. CIBC approached us earlier this year on changing our stamping rate,” said Leana Aschbacher, senior manager of financial services for the Town of Strathmore. “We have six facilities that we have with CIBC with our swaps. We have two of them that are expiring in 2027 with balloon payments in excess of $2.3 million. We have another two in 2029 in excess of $4.6 million, and we have one that is scheduled for a balloon payment in 2030.”

A balloon payment refers to a large one-time payment sum due at the end, or “maturity” of a loan term. This structure is often used in order to maintain lower monthly payments on outstanding debts.

The idea effectively being to maintain affordable payments on a short-term financing solution until a given project begins generating return, the earnings from which in turn fund the balloon payment. 

CIBC offered the town new debt servicing rates to lock in now and prevent any unanticipated interest rate increases due to market changes. 

By pushing debt forward, the town will continue to pay interest on amounts borrowed, which will impact total expenditures on each respective project; however, agreeing to the suggested terms would not increase the town’s total authorized debt allowance. 

“In 2027, you would see a $2.3 (million) principal payment that we would have to raise taxes to pay for. One of the ways that we could lessen that impact would be reducing the amount we put into reserves, which is not administration’s recommendation,” explained Aschbacher. “To keep our tax increase reasonable for our taxpayers, we would have to do a substantial increase where last year a one per cent increase, I believe, was $180,000. If you are looking at $2.6 million, that is almost a 10 per cent increase.”

The town’s current outstanding loans with CIBC total to approximately $10 million. Notice was provided to the town in March of an increase being made to a portion of the interest cost, referred to as a “stamping fee,” by 0.55 per cent per annum on the debt. 

Over the course of the remaining life of the loans, from 2026 to 2031, this is anticipated to cumulatively cost the town $145,000.