Grande Prairie City Council’s Financial and Administrative Services Committee has opted to move forward with a new borrowing bylaw that allows the city to access a $15 million line of credit from the Province of Alberta.
According to city administration, the change comes in large part due to the current state of the bond market, which is providing favourable returns to investors presently, and Deputy Mayor Gladys Blackmore says the line of credit will help support the city through low tax revenue times like the beginning of the year.
“The benefit is that right now the bond market is providing excellent returns and normally we would take money out of investments to support the period of time when we are short on tax dollars, simply because taxes aren’t due until June,” she says. “This year, because the bond market is providing excellent returns, it’s a better financial tool to use a line of credit.”
Grande Prairie Chief Financial Officer Danielle Whiteway said during the meeting that council should consider the line of credit a “short term” borrowing method to be utilized for the next two to four months, giving the city a supplemental income until taxes are paid in the summer.
Blackmore adds that residents will benefit from the choice as council is anticipating a “positive cashflow” as a result of the process.
“The residents will benefit in my opinion because we will be earning a higher rate of interest on investments than the interest will be paying out on the line of credit, so there’s a positive cash flow there.”
According to the city, residents should not expect any tax implications from the choice, and the credit line “will not impact” tax budgeting.