The City of Melfort is expanding its borrowing capacity to help address a massive water line replacement project (Cam Lee/northeastNOW Staff).

By Aaron Schulze

Melfort Water Main

Melfort council doubles borrowing capacity ahead of waterline grant applications

Jan 14, 2020 | 9:47 AM

Melfort council approved an increase in the city’s external borrowing capacity to $17 million during their Jan. 13 council meeting.

The new number is more than double the previous $8 million limit set in the mid-2000’s, but the City of Melfort doesn’t intend to borrow the new increased amount unless its grant applications to the provincial and federal governments are approved to fund the city’s water line replacement.

“We’re making sure we’re in a position where we have the money available, so if we do get approved, we can move forward,” Mayor Rick Lang said. “Just because we’re increasing the potential debt we can borrow to $17 million doesn’t mean we’re borrowing $17 million.”

The city applied for the Investing in Canada grant to help pay for the replacement of 12.7 kilometres of water lines. The entire job was projected to cost about $17 million, but Lang said the cost has been revamped to $19 million.

Even if the city received federal and provincial funding, it wouldn’t come right away.

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“As we’re doing the work, the city has to fund the entire amount,” Lang said. “After a certain portion of work has been done, we send in the receipts for the paid bills – with respect to the work that’s been done – to the two levels of government and then we’re reimbursed.”

If the grant applications are approved, funding for the water line replacement project would be split three ways between the federal and provincial governments, and the City of Melfort. A near $19 million bill would therefore cost the city approximately $6 million.

On the other hand, Lang said the city has an “Option B” in case government funding isn’t approved.

“We’re going to have to allocate some money to water line replacement and we’re going to have to do it little by little as we can afford it,” he said. “That would be using our infrastructure replacement fund, gas tax, and investment earnings. That’s what we would have to spend on waterline replacement as to the $19 million project being done all at once. It’ll be a smaller project on an annual basis until we eventually do get approved for something much larger.”

Lang doesn’t know an exact date when the city will know if it has been approved for government, but he expects it to take a couple of months.

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aaron.schulze@jpbg.ca

On Twitter: @SchulzePANow