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)
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