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Buffalo Pound’s pursuit of $60M loan receives support from council

“Sometimes we take it (the water source) for granted until something goes wrong. But this is going to provide water security for our city for decades to come“
Buffalo Pound WTP 2
An aerial view of the Buffalo Pound Water Treatment Plant. Photo courtesy Facebook

City council will support the Buffalo Pound Water Treatment Corporation’s pursuit of a $60-million loan for its plant upgrade project and will guarantee one-quarter of that funding using the city’s debt limit.

Upgrades to the 66-year-old Buffalo Pound Water Treatment Plant (BPWTP) will cost $252.8 million, with $163.4 million from the federal and provincial governments. TD Bank will provide the $60-million loan, although the plant’s municipal owners — the cities of Regina and Moose Jaw — will have to guarantee that funding. 

Based on the ownership percentage split of the plant, Regina will cover $44.4 million and Moose Jaw will cover $15.6 million.

The corporation attained a 20-year non-revolving term loan with an interest rate of 3.26 per cent. This will be locked in once legal documents are signed.

During the June 14 regular meeting, council voted unanimously to authorize the finance director to enter Moose Jaw into all necessary agreements with the corporation, the bank, and the City of Regina for the $60-million loan and guarantee Moose Jaw’s coverage of $15.6 million. Council also authorized the city solicitor and city manager to handle other aspects of the agreement if required. 

Adding to the debt limit

This $15.6 million debt amount will appear on Moose Jaw’s consolidated financial statements and be applied to the debt limit, finance director Brian Acker said during the meeting. 

While the money must be included in the city’s debt limit, the corporation will pay the loan’s principal and interest amounts monthly using revenue from the rates it charges Regina and Moose Jaw. This will result in each municipality indirectly funding the loan repayment based upon consumption rates. 

Moose Jaw has a debt limit of $95 million, with $54.6 million used as of March 31. City hall expects to borrow $8 million for the high-service pumphouse project that, coupled with the $15.6 million for the BPWTP project and debt repayments this year of $3.1 million, will bring overall debt to $75.1 billion by Dec. 31. 

City council has also agreed to guarantee a $1-million line of credit (LOC) for the Moose Jaw Municipal Airport Authority’s renovation project using the debt limit, while the city has a $15-million LOC that would count against the limit when used. 

Of that $75.1 million debt, $25.9 million relates to the BPWTP, added Acker. The corporation will repay that through the water rates it charges both cities and their taxpayers. 

Council discussion

The fact the corporation acquired a 20-year swap interest rate is good news, said Coun. Dawn Luhning. Interest rates are low and she didn’t expect them to increase soon, but if they did, the corporation could lock in at 3.26 per cent. 

“When you’re borrowing money, there’s a cost of doing business,” she added. “But that’s a nice rate over 20 years.”

City council has been installing new cast iron water mains to help renew the water system, Coun. Crystal Froese said. The BPWTP initiative is one of the largest projects that council has supported because of its magnitude and effect on the city. 

“Sometimes we take it (the water source) for granted until something goes wrong. But this is going to provide water security for our city for decades to come,” she added. 

Some of these water infrastructure projects have been hanging over council’s head since 2009, although steps have been taken to address them, said Coun. Heather Eby. While this loan is “an astronomical amount of money,” council is working with great partners who have worked hard to reach this point.

The cast iron project, upgrades to reservoirs, and the BPWTP project will provide water security not just for today but for generations of children who come afterward, she added.

The next regular council meeting is Monday, June 28. 

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