A bylaw to repeal an authorization to borrow funds to replace the Motor Control Center led to a discussion about where the funding should come from.
The Motor Control Center controls the flow to the City of Cranbrook’s spray irrigation fields outside of town.
The repeal is necessary so that Finance and Computer Services can proceed with a second alternative approval process to obtain elector approval to borrow up to $700,000.
CAO Wayne Staudt explained that the bylaw is being repealed because the city had the application out one day late.
Charlotte Osborne, director of Finance and Computer Services, explained that under the municipal requirements the application must be advertised for 31 days, not the 30 days that city staff had first thought.
Coun. Wesly Graham asked why they had to borrow in the first place and couldn’t take funds directly out of the accumulated surplus.
Staudt said the project is a part of the sewer fund, and not the general fund.
“We do have an accumulated surplus in there that is a little over $1 million,” Staudt said. “Our target is to have a surplus of over $2 million.”
Staudt said that while there is a surplus, it is not at the recommended amount, adding that if the city had $3-4 million in the surplus it would be different.
“Historically, large capital projects, we always borrowed,” he said.
Graham then clarified that he meant the city should fund the project out of the general fund surplus, rather than the sewer fund accumulated surplus. That way the city could avoid having to reapply to go to a second alternative approval process.
Staudt said the funds are set up to fund each project in its category.
“Our sewer fund, our water fund, our solid waste fund, our airport fund, are stand-alone projects,” Staudt said. “When a project is designated for the sewer fund we use sewer revenues.”
He explained that is why the city collects frontage taxes and sewer fees.
“Some municipalities may not have sewer and water funds, but we do,” he said. “We specifically collect funds for those projects.”
Graham noted that to him this is a large-scale capital project, so they could move funds from the general fund to the sewer fund.
“We have some surplus funds in general, we could move them to the sewer fund, we could use money that we have rather than going out and getting a loan,” Graham said.
Staudt said funds can be transferred, but it is not that common. He also said there is a belief that if you transfer funds, you should transfer them back, since the money was initially collect for a different purpose.
“I’m not saying we couldn’t change that going forward, I’m just telling you what our history has been — we’ve never done that,” he said about the transfers.
Osborne said that borrowing is not always bad.
“However this is not an emergency situation where we have to deal with it now and we don’t have time to go through an (alternate approval process) in some cases,” Osborne said. “Here we have time to do it, so in my opinion, I would not want to deplete our surpluses as a policy to fund some of these capital projects.”
Osborne said they know that the infrastructure deficit is significant.
“While borrowing is relatively inexpensive and while we have time to go through the (alternate approval process) this would be my recommendation,” she said.
Osborne also noted that when she says it’s not an emergency she was referring to the borrowing process, and not the project itself. The project won’t get done until the fall at the earliest, as irrigation season begins May 1 and goes into the fall.
Council voted to repeal the bylaw and the MCC borrowing will return to council at a future meeting.
