How will Airdrie's $44 million debt financing be used?

Airdrie City Council approved over $44 million in debt financing, also known as debentures, in a series of amended bylaws to finance several crucial infrastructure and equipment projects in the coming years.

All the projects, including the design project for the South West Recreation Centre, the Highland Park Fire Station, as well as the fire vehicle and equipment projects, were enumerated in the 2024 Budget and approved.

What is a debenture?

According to city documents, debentures are defined as, 'a means for a municipality to acquire debt financing. This type of financing is regulated under the Municipal Government Act and requires an approved bylaw.'

"Debenture bylaws have an advertising requirement of two consecutive weeks followed by a fifteen-day petition period. Council may proceed with second and third readings of the bylaw if there are no petitions received. Debenture bylaws are valid thirty days after the second and third readings."

Breakdown of costs

The largest debenture has been allocated to the Highland Park Fire Station, at over $29 million.

"This station is required to maintain emergency service responsiveness as development and growth continue in the Northeast," city documents stated.

Stephanie Mitchell with the City's Budget and Financial Planning department added that the change in the existing bylaw would ensure that the funds are available when required to begin construction on this fire station. 

The bylaw stipulates that the multi-million dollar loan from the Government of Alberta will, 'not to exceed twenty (20) years from the Government of Alberta – Loans to Local Authorities, or another authorized financial institution by the issuance of debentures or term loans, and on the terms and conditions referred to in this bylaw. The estimated lifetime of the project financed under this bylaw is equal to or over forty (40) years.'

Councillor Ron Chapman stated that this project is particularly important for the community.

"I think it's a very much-needed piece of infrastructure for our city."

The second highest cost will go towards the design phase of the South West Recreation Centre.

"The recreational center will address some of the demands (based on Airdrie's growing population) on the City's existing recreation facilities. Detailed design is planned for Q3 2024 and will run until Q1 2025, with construction proposed to start in 2025."

Budget 2024, however, stipulates that this project will also be funded by grants and offsite levies, as well as debt financing.

The other fire department expenditure, which is both for the funding of a fire Rescue Unit, as well as the upcycling of radios will cost over $2 million. Budget 2024 explains the need for a new fire rescue unit is necessary due to the current unit nearing the end of its lifecycle

"Due to the increased number of incidents that require a Rescue and the types and quantities of equipment required for these incidents, a heavier unit is required as the current Rescue is at capacity concerning the weight it can carry. The addition of a heavy rescue apparatus has been approved, with expected delivery in 2026."

City documents underlined that the debentures will be advertised to allow for a petition and that staff will return to council at the beginning of next month for second and third readings of the bylaws. 

As per the bylaws for each debenture, it is also in part stated that, 'The Municipality shall levy and raise in each year municipal taxes sufficient to pay the indebtedness.'

According to the city's 2024 budget, a large portion of its capital funding sources debentures.

A pie chart depicting the City's 2024 Capital Funding Source shows that debentures are a large portion of the funding. (Graphic Credit to The City of Airdrie)

Last week, the province announced its 2024 provincial budget, and though there are no specifics on whether The City will receive additional funding for its projects, Airdrie Mayor Brown said he remains hopeful that funding will be found for Airdrie. 

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