Clearwater County Council has passed the third and final reading of a bylaw that will authorize the potential borrowing of up to $5 million to cover current operating expenditures and obligations.
The bylaw (25/014), allows for the use of a short-term line of credit through Alberta Treasury Branch (ATB) up to a maximum of $5 million.
The bylaws will also see the county hold a $200,000 procurement (credit) card limit through Bank of Montreal (BMO).
This source would be used to cover any temporary cash shortages that may arise during the year.
Such shortages can occur when significant expenditures, like construction or maintenance projects, occur before the collection of annual tax revenues. For example, major projects in May might require funding before the county receives most of its tax revenue in September.
Council heard that the resulting outflow of cash may exceed what is currently available through bank accounts and short term investments. Depending on relevant interest rates, officials say it may be advantageous to the county to borrow on a short-term basis rather than redeem longer-term investments.
Dipping into this revenue source is rare, says Director of Corporate Services Murray Hagan, as he only recalls a small handful of times it’s been utilized.
As of 2023, Clearwater County’s debt limit stands at $96.5 million. However, the county currently carries minimal debt, with a balance of just $656,935 remaining on the Westview Lodge debenture, set to be fully paid by 2025. Another $64,821 in debenture debt from the former village of Caroline will be cleared by 2026.
The borrowing on procurement card balances will be paid monthly to avoid interest charges. Interest on the line of credit would be at the ATB prime rate plus 1 per annum. The ATB prime rate is currently 5.45 per cent.
This borrowing bylaw is an annual process, with council passing the first and second readings of the bylaw at its regular meeting on Jan. 28, 2025. Now that it has passed third and final reading, the bylaw is officially in effect.
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