Town to borrow for sewage system upgrades

By John Watson Local Journalism Initiative Reporter

Following the dictates of the Municipal Government Act (MGA), the Town of Strathmore is implementing a debt financing bylaw, this time aimed to improve local sewage systems. 

Presented by Riley Brolly, manager of financial planning for the town, during the April 1 meeting, administration had recommended the passing of the bylaw, allowing the town to borrow nearly $5 million to support the project. 

The terms of the incurred debt annotate that the town will take no longer than 25 years to complete repayments, at a maximum rate of six per cent annual interest. 

“Administration (recommended) passing one bylaw for all the budget and borrowings in one swing, with separate draws taken on the loan each year to match the budget council approved,” said Brolly. “As of today, the Alberta Capital Finance Authority borrowing rate on a 25-year loan is 4.36 per cent annually, which equals debt servicing on the 2026 portion of debt of $154,000 annually, up to $327,000 annually then all three draws are taken within the three-year period.”

The passing of second and third readings follows the introduction of the bylaw in January and is now scheduled to take approximately three years to complete. 

Given the passing of the bylaw, town administration is now tasked with securing the financing for the first draw, which is anticipated for the fall of this year. 

Responding to an inquiry by Coun. Melissa Langmaid, Brolly confirmed that while interest rate increases between now and the end final financing draw are possible, they are not likely to be dramatic and will be capped at six per cent as per the financing agreement.

“We would bring that to council’s attention down the road; we could also potentially give council different options on changing the structure of the current financing as well, including possibly taking on more debt, using more off-site levies, reserves if it made sense at that time as well,” said Brolly. “If the rates change, we could provide alternatives to what council has previously approved through a budget amendment.”

The town’s central trunk sewer collects sewage from approximately 80 per cent of the current town. Additionally, developments north and west of the town connect to the trunk, further limiting its current service capacity.

Future and ongoing developments which will connect to the system include Lakewood, Westcreek, Wildflower, and Strathmore West.

The draws made by the town, sequentially, would consist of $2.32 million, $1.2 million, and $1.39 million over the three-year period. 

As it currently exists, the estimated total cost to the town for the project equates to $7.64 million including accounting of debt repayments. 

Council voted to pass both second and third readings of the borrowing bylaw unanimously.