Canmore is expected to borrow $8.8 million in bridge financing to complete its $39 million Multiplex project.
First reading of a bylaw to borrow the funds was passed in December and is less than the originally proposed $14 million in bridge financing when the project was approved.
Interim Chief Administrative Officer Lisa de Soto said administration is recommending a mixture to cover the $14 million needed with a smaller debenture and the remainder coming from cash reserves.
Bridge financing is needed to cover a shortfall in the Municipal Sustainability Initiative capital grant funding the Town will eventually get to pay for the facility.
She explained by doing so the overall cost of financing is $3 million a year, which matches exactly the cashflow of MSI capital grants the Town receives.
It also reduces the amount of debt the Town has, which affects its debt limits and debt servicing limits as set out in the Municipal Government Act.
“This is an appropriate split, worthwhile and manageable within our limits,” de Soto said.
Under the Municipal Government Act, debt servicing costs must be below a quarter of the municipality’s revenues and debt the Town can sustain is 1.5 times its revenues.
If the total financing of $14 million were to be by debenture, said de Soto, Canmore would reach 90 per cent of its allowable debt servicing and would have to report to municipal affairs.
Based on 2010 financials the Town’s legislated debt limit is $48.1 million and total debt servicing limit is $8 million.
