'Dug ourselves into a hole': City of Regina to request debt limit increase

City of Regina to request debt limit WATCH: With the next election just months away, the City of Regina is preparing to ask for a debt limit increase. Donovan Maess reports.

The City of Regina is preparing to ask the Saskatchewan Municipal Board (SMB) for an increase to its debt limit.

According to administration, Regina’s maximum allowable debt is $660 million. However, with several projects incurring debt to go ahead, just $299 million remains available for use.

“We still have the aquatic centre as well as some other things to fund,” City Manager Niki Anderson reminded executive committee Wednesday.

On Tuesday, council approved the use of between $92 million and $119 million in debt financing to allow the Regina Public Library to start their Central Library Renewal Project.

On Wednesday, Executive Committee examined using at least $100 million in debt to pay for the expansion of Regina’s water network.

The project would ensure water pressure is adequate in all areas of the city.

“It’s more about prioritization of outstanding work,” Anderson said. “And looking at the different ways at funding them.”

Council has prioritized seven large capital projects in their latest budget. Five of them are already scheduled to use debt funding.

They are the water network expansion, a new indoor aquatic centre, wastewater treatment plant, the central library renewal project and many remaining unfunded service agreement fees.

Two other projects, the multi-purpose event centre and Ring Road railroad relocation projects also remain unfunded.

Total costs of all seven is $722 million, which is $423 million above the city’s allowable debt limit.

“We’ve failed to deal with the fact you have to replace infrastructure,” Mayor Sandra Masters told reporters following Wednesday’s meeting. “It has kicked cans down the road.”

“There is an aspect of short term borrowing while we get it right in four to five years,” she added.

“I’m not sure what the alternative is,” Ward 4 coun. Lori Bresciani said. “We’ve dug ourselves into a hole.”

“To me, that’s not how you run a city,” she added.

“Perhaps we have to pay down debt a little more aggressively than we are currently,” Masters said.

The city must request permission from the SMB to increase its debt limit.

In August 2023, administration applied to have its debt limit increased to over $800 million. The SMB denied the request and asked the city to reapply.

The $660 million debt limit was then approved in January of this year.

“[SMB] wanted the requests tied to a project,” Masters said. “That is what we’re illustrating here. It’s really a matter of deciding we want this one to go next.”

“We could borrow less,” Director of Financial Services Kim Krywulak said. “But based on how the projects have been staged, we felt $100 million was appropriate.”

The main revenue source for repayment of debt is property taxes. Any potential increases for residents won’t be final until a proposed budget comes forward in the fall.

It is possible the city finds other funding sources for the projects.