TAMRMS#: B06
4.3
Information Item Only
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Debt Strategy Update
Presented by: Stanley Chan, Manager, Financial Reporting and Operations, Finance and Strategic Services
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SUMMARY
To provide Council with an overview of the City’s current debt position and the impact of 10 Year Capital Growth Plan projects on debt capacity.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
N/A
BACKGROUND AND DISCUSSION
The city utilizes debt to fund large, multi-year capital projects, spreading costs over the life of assets to ensure intergenerational equity. The City primarily finances debt through Alberta Treasury Board and Finance, which offers competitive, fixed interest rates that eliminate market fluctuation risk. Debentures are requested based on actual year-end project costs, with the semi-annual servicing debt repayments beginning the following year. This repayment will be an increase to the operating budget in the following year, which may be offset either through reserve funding or retirement of debt. The City employs a laddering strategy to stagger maturities aligning repayment with asset lifecycles to balance debt capacity.
Pursuant to regulation established under Alberta’s Municipal Government Act, the City of St. Albert’s debt limit is 1.5 times annual revenue and the debt servicing limit is 0.25 times revenue. St. Albert’s Debt Management Policy further restricts borrowing to 85% of the provincial limit and caps debt servicing at 18% of the operating budget (12% for tax-supported debt), ensuring fiscal sustainability while leveraging the benefits of stable provincial rates.
Current Position
The City's current long-term debt relates to the following 12 significant projects:
• The first stages of Ray Gibbon Drive Stage 1 and 2 (originating in 2006)
• Phase 3 North Interceptor Project 9 (originating in 2018, 2019)
• Ray Gibbon Twinning (originating in 2020)
• Fire Hall #4 (originating in 2021)
• Range Road 260 (originating in 2021)
• The North St. Albert Trail (originating in 2020)
• The North St. Albert Trail Phase 3 (originating in 2024)
• Municipal Facilities (FCM Loan for Fountain Park) (originating in 2024)
• Villeneuve Road (originating in 2023)
• Transit Garage (anticipated in 2025)
• Lakeview Business District (anticipated in 2026)
• Police Building Renovation (anticipated in 2026).
As of December 31, 2025, Council has approved $220 million in debt, of which $107 million has been drawn, and $113M has not yet been taken out. The City’s current internal debt limit is $307 million.
The City’s borrowing capacity is determined by comparing the total debt we already have and the debt we expect to take (on already approved Council projects) on in future years against the internal debt limit. This is a point-in-time snapshot based on current forecasts and assumptions. Approving a new project through debt will reduce available borrowing capacity and may delay or change the timing of other strategic priorities.
Impact of 10 Year Capital Growth Plan Projects
The City’s current debt is within its internal limit, but including debt funded projects identified in Councils 10 Year Growth Capital Plan provided as an attachment titled
“10 Year Municipal Growth Capital Plan” would result in the city exceeding its debt limits.
The proposed debt funded projects in the 10 year capital growth plan are:
• Community Amenities
• RR 260 Road Construction
• Badger Lands Site Plan & Development
• Policing Services Building
• North Transit Park & Ride
• North St. Albert Trail Improvements
• Public Works Yard
• Fowler Way
• Fleet Services Garage Expansion.
The total cost of these projects is $339 million. If these projects are approved based on the timing in the current 10 year plan, the City would exceed its debt limit in 2030 requiring the deferral of projects into future years.
It is important to note that the current proposed 10 year capital plan is not a comprehensive list of all the projects our community and developers will need over the next decade, it is a starting point. Any new projects added to the plan will require Council to defer projects even further. This is a balancing act to align priorities with fiscal responsibility.
Debt decisions should balance maintaining quality of life with financial considerations. The purpose of debt policies and guiding plans is to strategically manage borrowing capacity for future capital assets, maintain maximum flexibility of current operating funds, and limit the impact that debt charges will have on future tax and utility rates
It is essential that Council has a holistic understanding of the City’s funding capacity and how current decisions will impact the ability to fund future projects. This perspective will help inform strategic planning, prioritization and ensure decisions are made with full awareness of financial implications.
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
N/A
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
Long-Term Debt Strategy
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
N/A
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Report Date: December 9, 2025
Author(s): Stanley Chan
Department: Finance and Strategic Services
Department Director: Anne Victoor
Managing Director: Diane McMordie
Chief Administrative Officer: William Fletcher