By Andrew de Souza

Debt to reach more than $900 per person

Dec 22, 2010 | 10:44 AM

By year’s end the city’s debt is expected to reach more than $32.3 million, costing each resident about $927 for the principle and, by the time it’s paid off, about $150 in interest.

The city holds two kinds of debt, depending on who they have received money from.

At the end of the year, the city will owe about $17.88 million to outside lending institutions and banks and $14.4 million in “internal” debt. This is when the city uses money originally set aside for another purpose.

The city says it expects these debts to be cleared by 2014 through a combination of tax revenue and user fees. By then, the city expects to have paid about $5.16 million in interest.

Debt considered manageable

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Under provincial legislation, the city is allowed to have $40 million in debt. According to law, internal debt does not count towards that limit, so technically the city is well within it at $17.88 million.

Mayor Jim Scarrow said as Prince Albert grows, it needs to occasionally take on reasonable debt to provide for the community.

“You’ve got two options,” said Scarrow.

“Either wait until you have sufficient funding — and that would take forever — or you do as a homeowner and rather than waiting to have cash for your home you take out a mortgage and pay for it over time.”

He added while it was always a tough decision to take on debt, the economic conditions have never been better.

“All of (Saskatchewan’s) cities have taken on more debt because it’s prudent to do so because of the capacity of the cities and also because interest rates have never been lower,” he said.

“It’s a good time to be incurring debt to build facilities that a community needs and at the same time have it manageable.”

What’s owed and to whom

According to city staff, the external debt is made of $4.87 million owed to CIBC for work on the infrastructure and planning on the West Hill area, $8 million owed to Canadian Mortgage and Housing Corporation, CMHC, for work on the city’s water treatment plant and $5.9 million owed to the Saskatchewan Municiple Financing Corporation, SMFC, for work on the waste water treatment plant.

As well, the city purchased assets from Danny’s Golf Shop and borrowed $275,000 for it.

The projects that make up the internal debt of $14.4 million are the Alfred Jenkins Field House, work on the Water Treatment Plant and purchasing the police service’s substation. The Field House will be paid for through the Capital Projects Levy and donations, while work of the treatment plant is expected to be recouped through user fees.

The documents relating to the city’s debt are available in the city’s 2011 budget document, which were released on Tuesday and in the city’s 2009 audited financial reports.

For more on the city’s recently released budget documents, check back with paNOW.com

adesouza@panow.com

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