The City of Moose Jaw is in great shape financially compared to other Saskatchewan cities and could borrow $75 million if it wanted to, says the Royal Bank of Canada.
Aside from yearly costs to review and rebalance the strategy for reserves versus overall financing, the municipality is doing well, RBC’s Greg McIntyre, senior commercial account manager, told city council during its 2020 budget meeting.
By taking advantage of affordable borrowing rates of 2.85 per cent and productively investing reserve funding, residents are competitively positioned to endure financial shocks; Moose Jaw even has some “surplus horsepower” to support future growth.
The municipality should continue to monitor the financial climate to determine the opportunities to borrow at exceptionally low rates as weighed against the productivity of invested surplus, McIntyre continued. Reserves can be important when facing economic headwinds with high interest rates, which may be a barrier to borrowing more money.
“The City of Moose Jaw is in above-average condition with both its financial structure and its treatment of invested reserves. There are many cities that would love to have Moose Jaw’s debt capacity and war chest of reserves,” McIntyre said. “The future looks bright for this city.”
The economic picture looks rosy when every municipality is lumped together with Saskatoon and Regina during a financial analysis, but outside of those cities, most of the province has experienced a natural recession during the past 24 months, he added. It’s been a particular challenge south of Highway 1 due to the downtown in agriculture.
McIntyre gave a presentation looking at three financial benchmarks and how Moose Jaw compares to other similarly-sized Saskatchewan municipalities. That presentation will follow in another story.
Council discussion
Moose Jaw’s business sector appears to be in good condition, especially on Main Street, which had only four empty storefronts between Manitoba Street and Ross Street when Mayor Fraser Tolmie took a trip downtown, he said. He considered that positive, especially since council has worked with the downtown business association to strengthen that area of the city.
“… I’m not really keen on borrowing more money for the City of Moose Jaw,” Coun. Brian Swanson told McIntyre. “It won’t benefit (us). It might benefit the bank. Ten years ago, we had no debt. People are (now) saying go into debt (and) don’t worry about it; I’m not one of them.”
Most people Swanson represents probably hold a similar view, said McIntyre. However, those people have never been able to lock in interest rates for 15 years as the municipality can. Council has “unparalleled leverage” to do that.
“Currently, this is what math is telling us now. The same advice in five years might not be good advice,” he added. “I’m not saying the city should (borrow $75 million), but keep the context in mind … . Rates are low.”
The first regular council meeting of the new year is Monday, Jan. 13.
