The Westlock Foundation is planning a 61-bed expansion to the Pembina Lodge in Westlock, but how the $5 million expansion will be financed is still up for discussion.
The option being proposed is to have the member municipalities apply for the financing through Alberta Capital Financing Authority (ACFA).
Both Westlock town and county councils tabled the issue until the new year.
Coun. Clem Fagnan, one of the foundation’s representatives on the Westlock town council, brought the issue forward at the town’s Dec. 13 meeting.
“The foundation is looking at financing a new addition to the Pembina Lodge,” he said.
He explained that private banks can only offer a fixed interest rate for five or 10 years, whereas the ACFA can offer a fixed rate for 20 years.
“Athabasca went this route, and they were saving close to $1 million,” said Coun. Marjorie Sterling Miller.
The catch, Fagnan explained, is that member municipalities would have to have the debt on their books, as opposed to on the foundation’s books, because the ACFA will only provide financing for municipalities themselves and not the foundations they run.
This does not necessarily mean the municipalities would be paying extra to service the debt, but the Municipal Government Act allows municipalities to have only a limited amount of debt relative to their total budgets. Having this debt on the books could impede borrowing in the future.
The town would bear about one third of the debt, the county about half, and the remainder would be split between the Village of Clyde and the M.D. of Lesser Slave River No. 124.
Sterling Miller said she felt it wasn’t fair that the municipalities should have to shoulder the debt as a liability on their books, and that the provincial government should allow municipal foundations access to ACFA funding.
“I really think we should be contacting our government about this,” she said.
Westlock County Coun. Maureen Kubinec raised the issue at the county’s Dec. 14 meeting.
She spoke in favour of the expansion being funded through ACFA, but conceded it could cause problems for the county with respect to their debt ratio.
“The effect on the county is it would sit on our books as a liability,” she said.
“The only way we can borrow from that is with the backing of the funding partners.”
Both Westlock and Westlock County councils tabled the issue until the new year so that they can look at their existing debt ratios following approval of their budgets.
