Borrowing Bylaw 101

My pledge to St. Albertans is to abide by the results of the upcoming plebiscite vote on the Library. If more than 50% support constructing a second Library I will perform my role as Mayor to get this project built, if there is less than 50% I will do what I have to as an elected official to ensure that a second library is not built. I pledge to listen to the public and I would encourage anyone running for public office as either Mayor or Councillor to make the same pledge to the electorate.

One of my council colleagues has made a pledge to “Not borrow any money for a new Library before 2018”. I hope that we do not borrow any money before the results of the plebiscite are determined, however, at this stage I can’t make such a declaration because city council has already approved the Library Borrowing Bylaw (in a 4-3 vote with Crouse, Heron, Osborne and Brodhead in favor) and because city council has approved the Library Borrowing Bylaw we have given our staff authority to borrow money to spend on a new branch library as early as July 10, 2017. City council no longer has any legislative control over whether or not money is borrowed, council’s role in the borrowing bylaw is complete.  No member of council can currently prevent our staff from borrowing money for a new Branch Library. The only way council could have maintained some control over whether or not we borrowed money for a new Library was to either:

  1. Postpone the Library Borrowing Bylaw until after the election (Which I had motioned to do but my motion was defeated as it was only supported by myself, Russell and Hughes) or
  2. To not pass the Library Borrowing Bylaw that was in front of council. (This motion was also defeated with myself Russell and Hughes in favor)

Since the borrowing bylaw was approved no member of council can guarantee you that borrowing will not take place until 2018. This decision is now in the hands of our city manager and city staff.

A municipal borrowing bylaw is a very formal legislative process requiring three readings, a public hearing, and a petition period to borrow money. This formal process is not taken lightly and gives the authority to our staff to go out and borrow a specified amount of money (in this case up to 21.9 million) for a specified purpose (In this case a second branch Library) for a specified term (in this case 20 years) up to a maximum interest rate (In this case up to 10%). After the money is borrowed it cannot be used for any purpose other than that specified in the borrowing bylaw (In our case a second Branch Library) and our staff can only borrow money under the terms and conditions outlined within the borrowing bylaw.

One concern I have is that since council has approved the Library Borrowing Bylaw and given our staff authority to borrow money, our staff could go out and borrow 21.9 million dollars right now. Let’s assume that this is done and then we have a plebiscite result that returns a “No” for a second library. We then would have 21.9 million dollars of debt that we have to pay interest costs on over 20 years and we could only spend it on a branch library. The city would have to incur a large penalty (my guess is just over 1 million) to get out of this financing agreement and if council did not want to build a new branch Library they would be stuck with this financing cost. In the past the question has been asked at council what would it cost to repay the Servus Place debt early? The answer we get is that it would cost you more in penalties than the interest owing and the same would likely apply here.

That is why I don’t think council should have approved the Library Borrowing Bylaw until after the plebiscite results were known, and only if the results were supportive of the branch library. The motion should have been defeated or postponed. If either of those actions had been taken, council could have maintained control over borrowing, maintained control over borrowing costs and we could have shown the public that there was at least an intent to listen to and abide by the plebiscite results. If any member of council wanted to ensure that no money was borrowed prior to 2018 the only way to do that would be to move a motion to rescind the borrowing bylaw. To date that has not occurred and the only motion we have before council right now in regard to the library borrowing is a motion by Councillor Heron to fund the purchase of land and detailed design work for a branch library through capital reserves. This motion could expedite the branch library project but it will not ensure that money is not borrowed prior to 2018.

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About the author

Cam MacKay was born in St. Albert and has lived most of his life in the community. Having lived in the Sturgeon and Braeside neighbourhoods, Cam has grown to truly appreciate the tight, friendly communities of St. Albert. Cam was schooled in St. Albert and believes his educational experiences here prepared him well and helped in his success while attending the University of Alberta. Cam received his Bachelor of Commerce, with a major in Accounting. While working towards his Certified Management Accountant’s designation, he was a Budget Officer for the Government of Alberta, where he learned the skills that led him to fulfill his entrepreneurial dream of opening his own business, called Open Spaces Doggie Daycare. He has successfully operated this business in St. Albert’s Campbell Business Park for the past six years. Cam appreciates how important community is and has been involved with many community groups. He thinks that community is what makes St. Albert strong and is honoured to be playing a role in this regard. He is looking forward to his position on St. Albert City Council. Cam is married and has one daughter. Cam's updated bio can be found on his campaign website: VoteCamMacKay.com

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