Saskatoon’s debt limit increased to half-a-billion dollars

Watch above: A major project on the books for next year means Saskatoon has to line its wallet. Wendy Winiewski compares the so-called $500 million allowable debt limit with similar sized municipalities to see how we stack up.

SASKATOON – The City of Saskatoon recently applied to the Saskatchewan Municipal Board for an increase to its allowable debt limit. The approval just came through, with a $558 million maximum. Ten years ago, the limit was $298 million.

The city’s Finance Manager Kerry Tarasoff said there’s no cause for concern. “All that means is, that’s as high as you can go,” said Tarasoff, “It’s just like your line of credit limit in your own home for example.”

The increase is required to move forward with a Civic Operation Centre (COC) which will be built in the city’s southwest. The COC will include a snow management facility; also the transit bus barns and city yards will be moved out of north downtown to the COC.

Construction will begin in 2015 with an anticipated completion of late 2016. Integrated Team Solutions will design, build, finance, and maintain the project with the city making payments over 25 years.

“Even though we haven’t gone out and borrowed that money ourselves, the fact that we’re paying a third party proponent for that project, and it is our asset, we have to consider that as debt,” said Tarasoff.

Roadway infrastructure, an upgraded water treatment plant, construction of the Remai Art Gallery of Saskatchewan, and a brand new police station are also contributing to the city’s debt.

At 2014 year-end, the city expects to have a debt of $237 million. Windsor, Ont., with a similar population, is less than half that at just $105 million while the City of Regina is projecting $275 million.

The city is taking advantage of low interest rates.

“We’ve gone through a period of pretty significant growth where we needed to invest more into infrastructure,” said Tarasoff.

The city remains confident in its financial plan and maintains a AAA credit rating from Standard & Poor’s since 2001. Windsor, as well as Regina, are rated AA.

Internally, the city has implemented a spending and hiring freeze as an attempt to curb a looming deficit at 2014 year end.