TAMRMS#: B06
9.2
title
Bylaw 35/2021 Solar Farm Borrowing Bylaw (2nd & 3rd Readings)
Presented by: Kevin Scoble, Chief Administrative Officer
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RECOMMENDED MOTIONS
recommendation
1. That Bylaw 35/2021, being a Borrowing Bylaw to design and construct a Solar Farm, be read a second time.
2. That Bylaw 35/2021 be read a third time.
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PURPOSE OF REPORT
To recommend second and third readings of a borrowing bylaw to allow the City to secure debenture financing for the design and construction of a Solar Farm on the City owned Badger Lands in northwest St.Albert. Several decision gates will be available to Council as the project progresses through the planning stage.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
Strategic Priority #4: Infrastructure Investment: Identify and build needed capital assets.
Related Corporate Business Plan Initiative: Identify and recommend opportunities for investment in long-term revenue generating infrastructure.
Strategic Priority #6: Environmental Stewardship: Explore innovative environmental and conservation opportunities.
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
N/A
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
On June 21, 2021 Council passed the following motions:
(AR-21-280)
1. That Council receive the Solar Farm Update report dated June 21, 2021 as information.
2. The Project Charter ENV-004 is approved for 26.1 million to be funded through borrowing bylaw 35-2021.
On June 21, 2021 Council passed the following motion:
(BL-21-039)
1. That Bylaw 35/2021, being a Borrowing Bylaw to design and construct a Solar Farm, be read a first time.
On August 17, 2020 Council passed the following motions:
(CB-20-054)
1. That $200K be funded from the stabilization reserve to support the preliminary and detailed design requirements of the full-scale Solar Farm.
2. That Administration provide an update to Council, upon the completion of the detailed design of the Solar Farm, by Q2 2021.
3. That a borrowing bylaw be brought forward to support the implementation of the presented Solar Farm Business Case in 2021.
4. That the back third of the Badger Lands to be allocated to support the long-term development of solar as a green industry within the City.
5. In 2021, Administration be directed to bring back a report to rescind all previous Council motions pertaining to the Badger Lands that are not consistent with dedication of those lands to the development of a solar power industry in St. Albert.
BACKGROUND AND DISCUSSION
Passing Bylaw 35/2021 will allow the City to access future debenture financing to be utilized towards the design and construction of a large scale Solar Farm on the City owned badger lands. Revenue generated from the Solar Farm is expected to fully fund the required payments on the debt and provide significant additional revenue to the City. The future use/application of this revenue will be determined by Council.
The passing of a borrowing bylaw does not compel the City to borrow any or all of the approved amount. It represents a required stage of the process and can be considered similar to a pre-approved mortgage. Council will have several opportunities to advise Administration of the intent/approval to proceed to the next stage.
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
In alignment to section 251 of the Municipal Government Act ("MGA") and Council Policy C-CAO-22 Borrowing Bylaw Advertising, the proposed bylaw was advertised in the St. Albert Gazette on June 30, August 4, and August 11 affording electors a full 60 days from the first advertising dare to contemplate a petition.
As no petition was received, Council may pass the bylaw.
Given the public interest in this topic, a Frequently Asked Questions, Project Milestones, and other relevant information have been provided as attachments.
IMPLICATIONS OF RECOMMENDED MOTIONS
Financial:
As different decision gates are passed, the City will be looking to borrow funds from the Alberta Treasury Board on a 20 year term. The actual interest rate will be based on the current posted rates at the actual time of borrowing and the advancement of funds. The drawing of funds may be staggered to more closely match with the required cash flows of the project.
The solar farm business case supports that the revenue generated from the solar farm will fully fund the required payments on the debentures. There is a risk (evaluated by Administration as small if the estimates received are accurate) that the funds obtained through sales of electrical power generated by the solar farm will be insufficient to cover the debenture payments which would then require any shortfall to be funded through municipal taxes or reserves.
The City has sufficient room within the Debt Limit and Debt Servicing Limit set by both the MGA and Council's Debt Policy.
Legal / Risk:
MGA Section 254 states that, “No municipality may acquire, remove, or start the construction or improvement of a capital property that is to be financed in whole or in part through a borrowing unless the borrowing bylaw that authorizes the borrowing is passed.”
MGA Section 188 states that, "The previous readings of a proposed bylaw are rescinded if the proposed bylaw does not receive third reading within 2 years after first reading, or is defeated on second or third reading."
Program or Service:
If the Borrowing Bylaw is not passed, the City will be unable to secure the financing required to support construction of the solar farm project. An alternate funding source would need to be identified or the project would need to be cancelled or postponed.
If the Borrowing Bylaw is not passed sufficiently prior to the expected start of construction, the financing processes could result in delays.
Organizational:
If the Solar Farm project is cancelled or postponed, resources will be reassigned to other funded projects.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
If Council does not wish to support the recommendation, the following alternatives could be considered:
Alternative 1. That second and third readings of Bylaw 35/2021 be postponed to a future date no later than June 20, 2023.
Additional motions for consideration:
1. That a remediation study, a portion of 2022 project charter ENV-001 Contaminated Sites Remediation, be advanced for approval in 2021 and be funded in the amount of $35,000 from the Capital Reserve.(alternatively this work could be prioritized within the Environment contaminated sites budget which would postpone work on other sites until 2022)
2. That the funding source for the pre-construction work on the Solar Farm Project ENV-004 in the amount of $135,000 be amended from debt financing to Capital Reserve.
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Report Date: August 30, 2021
Author: Anne Victoor
Department: Financial Services and Information Technology
Deputy Chief Administrative Officer: Kerry Hilts
Chief Administrative Officer: Kevin Scoble