Debt on the rise


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December 18, 2014 9:02 AM

During Monday night’s city council meeting, councillors proposed an additional $13 million to the capital debt.

At the end of the year, the capital debt will be an estimated $31.5 million and if the proposed budget passed at Monday’s meeting goes through, that debt will increase to $44.6 million by the end of 2015.

It was one topic that was brought up during the budget talks that had Coun. Jason Whiting saying that while interest rates are low, paying for projects through the capital debt is a better way to move forward, compared to increasing the tax burden to residents of the Border City.

“Knowing that the interest rates are low, we can spread the projects over a few years,” Whiting said why putting projects to the debt was good right now.

Increasing the capital debt has to come at a cost though, Coun. Larry Sauer said about putting more projects on the capital debt.

“We have to be very wary though,” he said, adding that Nicole Reiniger, the director of finance, has cautioned city council on continuous increases to the capital debt.

“What we have come to today is a guideline,” Sauer added. “Once we get the final assessment we will have to come back and reassess projects and how we pay for them.”

Sauer said that the Highway 17 corridor and the waste water management plant belong in the capital debt.

Nicole Reiniger, the director of finance with the City of Lloydminster, said that the capital debt is a great way to spread out payments over a few years when interest rates are low.

While no policy in place in the rate in which you pay back capital debt, Reiniger compared paying back capital debt to paying back a mortgage on a house.

“You have a long-term asset. When you have a long-term building project, we are going to use that building between 40 to 60 years,” she said. “It’s not unreasonable to prolong that debt over 10 years.”

Depending on the scope of the project, Reiniger said it can be prudent to, depending on the dollar value, extend the debt out over a period of time.

“There is no hard and fast rule. It’s just about being reasonable in your request.”

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