Regina keen to increase debt limit, possibly to $450M
City council in Regina has approved a plan to try to get its debt limit increased to $450 million or have $100 million in borrowing not counted against its current borrowing approval of $350 million.
The city needs to borrow money to pay for some major projects, including a new football stadium.
A provincial agency is responsible for ensuring cities do not over-extend their financial ability and Regina's debt limit must be approved by that agency.
Michael Fougere, the mayor of the city, said Monday a portion of the cost of the new football stadium will be recouped through a surcharge on tickets and therefore $100 million of borrowing should not count against the city's current limit.
"We're a growing community," Fougere said. "Interest rates have never been as low as they are now. This council believes very strongly that this is a prudent use of debt as we grow."
The plan for the football stadium includes borrowing $100 million from the provincial government.
In 2012, Regina received approval from the Saskatchewan Municipal Board, the agency that sets debt limits, to increase its borrowing limit to $350 million from $200 million.
According to a report on the issue, prepared by city officials, there is no set limit on what a city may borrow.
However, the report noted that if the borrowing needs go as planned, the city's debt load would exceed benchmarks recognized by credit rating agencies.
City officials said they would have to manage the debt carefully.
The background materials also noted that officials have been working on a Plan B, just in case the Saskatchewan Municipal Board turns down the request.
"[T]he province has committed to working with the city on developing other financing alternatives for the stadium," the background report said.
Shawn Fraser was the only member of council who voted against the plan.
"Don't leave our city with more debt than when we started. It's for our kids to pay it off," he said. "I think it is a lot of money and I think we have other pressing things that are going to require us to take on debt in the future."
Fougere, however, said the city could handle the debt load.
"Prudent and strategic use of debt builds the capacity of our community to grow and meet the needs of a growing community," Fougere said. "[The] last council and this current council has accepted that as the way to go."
Concerned citizens asked city council members to consider other ways to pay for the new stadium, in formal representations Monday night.
"It ... seems unfair ... that we must assume a huge share of funding for Saskatchewan's professional football club stadium," Wilma Staff, a former city politician, said in her presentation. Staff was on council from 1979 to 1985.
Jim Elliott, who ran for mayor of Regina in 2012, said increasing the city's debt limit would make it vulnerable in case other needs arose.
"When it comes down to the end, how many of us are willing to sit in debt up to our noses and be capable of doing anything but feel paralyzed by the fear that it is not a matter of whether we could be swamped in the future, it is only a matter of when," Elliott said.
He cited other financial needs of the city, including an unfunded pension liability and the pressing needs for expenditures on roads and sewers.
"Please stop this madness," Elliott said. "Cancel the new stadium proposal and consider a rejuvenation of our current sound stadium."
With files from CBC's Kent Morrison