Council passes borrowing bylaw to cash flow operations

April 16, 2020
For immediate release

Council passes borrowing bylaw to cash flow operations

Cold Lake, AB – Cold Lake Council passed a short-term borrowing bylaw to cash flow its operations through the COVID-19 pandemic and the expected economic fallout.

Administration brought the bylaw to council for consideration after determining that cashing in investments would result in losses greater than the interest that would be charged on the short-term loan. The city has already taken drastic measures to reduce operational costs, including placing a significant number of staff on administrative leave. The employment of over 50 staff members has now been affected through administrative leaves or a reduction in hours. This represents over 35 per cent of the city’s staff.

“We hope that our staff can come back to work soon – and that we do not have to borrow this money to sustain our critical operations through the COVID-19 pandemic, but we have had to take a look at every option available to us to ensure that we can weather this pandemic while providing essential services and maintaining crucial infrastructure,” Mayor Craig Copeland said.

The borrowing bylaw authorizes the city to borrow up to $10 million, and falls in line with measures that a number of other municipalities have taken to ensure the continuity of their operations. The money will only be borrowed if and when needed, which is expected to happen in July, if the current trend continues.

This measure was necessitated by the current economic situation, deferrals to property taxes and utility bills to assist residents, a loss of revenue from closed programs and facilities, no incoming revenue from ID 349 due to the absence of a decision on the city’s sustainability agreement, and the federal government’s continued refusal to pay the entirety of its Payment in Lieu of Taxes (PILT) for its property on CFB Cold Lake.

“With all of the measures that the Canadian Government has announced to help residents and communities, they continue to fail to pay their payments in lieu of property taxes as per their own rules,” Copeland said. “PILT is meant to assist communities who provide services to federal properties. How the government can continue to see the impact that shorting PILT payments has on communities, especially in these times, is beyond frustrating. The Government of Canada continues to spend taxpayers’ money fighting communities who want the government to follow its own rules – now would be the time to honour the PILT program.”

Instead, the Government of Canada has dug in its heels and further reduced PILT payments relating to the Department of National Defence’s Cold Lake Golf and Winter Club in what can be described as a new interpretation of the PILT Act being tested in Cold Lake.

The Government of Canada has an outstanding account with the city in the amount of over $22 million, which is substantial for a small city of 15,000 people.

The City of Cold Lake’s debt limit has also been drastically reduced by the absence of a decision on ID 349.

“The original deal, of course, was to provide for the sustainability of Cold Lake and so the ID 349 property tax revenue we received contributed to the amount the city could borrow,” Copeland said. “With no clear direction on the future of the city’s sustainability agreement, not only have we lost that property tax revenue for the time being, but our debt limit has been negatively impacted. This, of course, has meant that the city’s capacity to cash flow operations and implement programs to help business and residents through difficult times has disappeared during this very difficult time.”

The City of Cold Lake has been in contact with Alberta Municipal Affairs and expects a decision on the ID 349 agreement in the coming days.

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Thursday, April 16, 2020