City to take $1 million loan

By Ben Ingram

The current debt load of the city is set to increase to approximately $2.87 million after council approved a bylaw on Aug. 8 aimed at paying for upgrades to the storm sewer system.

The amount, pegged at $1 million, is expected to be financed through CIBC over a five-year term with an interest rate likely in the area of 2.99 per cent.

A provincial grant is also expected to pay the interest incurred by the financing, which means the city should be able to avoid the added cost of borrowing the funds – expected to add payments of almost $18,000 to the monthly budget.

“We are eligible for the interest that we have to pay to get that paid,” city manager Bruno Kossmann said, pointing to the Saskatchewan Infrastructure Growth Initiative that is expected to subsidize the interest.

A trip to the municipal board for approval was also unnecessary as the city remains just shy of its $3 million debt limit. Of the $1.87 million in debt Meadow Lake currently has on the books, $1 million is an unused line of credit held for emergencies and budgetary flexibility.

While the line of credit counts to the total even if unused, any borrowing from that account needs to be paid back by the end of the year.

Kossmann said that the loan was figured into the budget at the start of the fiscal year and that the SIGI grant was also a factor in its approval.

The interest rate quoted by the bank could still change, meaning adjustments may be needed with regards to the expected monthly payments of $17,964.

“I went out and had a quote obtained from three out of four financial institutions within the city,” Kossmann said to council on Aug. 8. “I’ve picked the lowest one.”

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