CAO discusses Columbia-Washington AAP process
In an interview with the Telegraph this week, Rossland CAO Cecile Arnott provided more details about the Alternative Approval Process (AAP) for the Columbia-Washington project and answered some questions surrounding it.
The reason the City is going to the public now for approval to borrow the money is for planning purposes for the fall budget. The deadline to submit a request to approve borrowing is August 27. Then there is a 30 day caution period. It will take a further two weeks to a month after that caution period before the City will know if they have won approval to borrow the money.
“When you’re planning, you need to know if you’re going to be able to borrow or not” said Arnott. “We don’t have to borrow the 4 million, we don’t have to borrow over 30 years, but it gives you flexibility to look at all the options in the fall, when we start the budget process.”
Approval for borrowing the money comes from the Ministry of Finance. The money is then borrowed through a debenture issued by the Municipal Finance Authority. The MFA puts out debentures in the spring and fall each year.
The original AAP asked to borrow 6 million dollars over 15 years. However, now the AAP is asking to borrow 4 million over 30 years. “There was a scope change,” said Corporate Officer Tracey Butler. “The scope of the original project was going to be all of Washington Street, right up to Plewman way. When the prices came in way too high, and we didn’t get the grant we were hoping for, then we had to cut the scope down. The most we could do, for now, was Columbia and that first block of Washington.”
Arnott added, “The longer duration also lowers annual payments and gives us the flexibility to put money towards other projects, if need be.”
The 2012 financial plan showed a borrowing to pay for the Columbia-Washington project over five years. “When we went to council in December, council decided that was too much of a hardship for citizens, with a substantial increase in taxes,” Arnott said. “In order to give the flexibility to make the right decision, we’re going back to the people and saying, ‘can we do that, over a longer period of time?’”
On the subject of temporary borrowing, so far none has taken place with this project. If the AAP gets approved to borrow via the debenture, then council can pass a temporary borrowing bylaw.
“I would recommend temporary borrowing. The rates are good, but we’ve also depleted all of our cash sources, and we need to replenish our cash,” said Arnott. The financial statements show that the City has $4.2 million in reserves, but that it faces an operating deficit of about $4 million. Arnott added, “We funded the Columbia-Washington project out of those reserves, and now we have to borrow in order to replenish them.” This explains the large deficit seen on the 2012 audited financial statements.
To halt the borrowing process, 256 signatures are required on the Prescribed Form, petitioning against the bylaw. If that number is not reached, the approval process will go ahead and be submitted to the Ministry of Finance. As of Monday morning, no one had come in to pick up a Prescribed Form.
Ms. Arnott said, “If anyone has concerns or suggestions, come in and see me. Give me a shout, I’m more than happy to sit down with anyone and discuss it.” She also encouraged the public to come out to budget meetings in order to get a sense of what it involves.