A new City of Revelstoke report is recommending a debt management policy be incorporated into the city’s long-term financial plan to help deal with significant city debt.
The city has approximately $15.59 million in outstanding debt with an additional $2.9 million to be tacked on as part of the Five Year Financial Plan.
According to a 2015 report prepared by the Ministry of Community, Sport, and Cultural Development, Revelstoke has the highest amount of outstanding debt compared to similar communities in B.C.
“A review of the city’s debt was identified as an important step in the financial planning exercise,” Tania McCabe, director of finance, said in her report. “Generally speaking, local governments have different philosophies around debt. Some communities have adopted a “pay as you go” philosophy, whereas others utilize debt financing more liberally to fund infrastructure and other capital projects, especially in a low interest rate environment.”
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In an interview with the Mountaineer, McCabe said the $15.59 million in current debt has been accrued over a number of years. Of the outstanding amount approximately $9.5 million is long-term general debt, $2.3 million is long-term water debt, and $3.3 million is long-term sewer debt. An additional $492,000 is short-term debt for vehicles and equipment.
The $2.9 million in additional debt includes the Big Eddy Waterworks and Thomas Brooks projects. McCabe said both of these projects are funded through local area service costs.
McCabe said local area service costs are used when request is made for an existing service to be extended into an area. In this scenario property owners who benefit from the service pay an additional amount on their property taxes to cover the cost.
Projects such as the roundabout are funded through development cost charges. These funds are collected from developers to help offset costs directly related to new development. McCabe said in some cases however, the cost of the project is larger than the DCCs collected so additional funding from other sources needs to be found.
McCabe said debt practices need to be linked to the city’s reserve goals being put in place as part of the financial planning process.
City council is set to discuss the new report at their May 11 committee meeting.
For more, read the report in its entirety here.
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