BARRHEAD - Woodland County councillors awarded E Construction the contract for the road resurfacing of Horse Creek Road in Fort Assiniboine during their April 5 meeting for $1,787,946.30, plus an additional 10 per cent contingency fund if needed.
Also included as part of the project is the construction of a new pad for the Fort Assiniboine Sand Salt Shed.
However, how the municipality moves forward with the project is still up for debate as the funding for the project has to wait until council finalizes the details of a borrowing bylaw.
Infrastructure director Andre Bachand noted the county received four bids for the project ranging from E Construction's lowest bid to a high of $2,660240.27 from Border Paving, with Knelsen Sand and Gravel and Allied Paving Company coming in the middle at $2,155,678.23 and $2,197,951.88, respectively.
The budget for the project, as set in the 2023 capital budget, is $4,500,000.
Bachand said public works upped the budget from what the project's engineers (MPE Engineering) had suggested due to account for inflation the industry seemed to be undergoing.
"We were pleasantly surprised at the prices that came in for the project," he said.
One of the reasons why the engineers believed the county received such favourable pricing is that they tendered the project early and that E Construction crews were already in the area with other projects.
"So their costs are not as much, and as such Woodlands County is getting a bit of a gift," Bachand said.
Debenture borrowing bylaw
Councillors also gave first reading to Bylaw 598/23, which if approved, would allow the municipality to take out a $1,966,740.93 debenture anywhere from 10 to 25 years in length to pay for the previously mentioned Horse Creek Road repaving project.
In a separate motion, councillors instructed administration to bring back a report regarding the municipality's outstanding debentures and payment schedules, and its 15-year forecast of projects that are likely to be funded through financing, in comparison to its five-year financial recovery plan (which it passed in 2019) to the April 26 meeting.
Corporate services director Victoria Chan said administration recommends a 20-year term at 4.9 per cent, which would mean two payments of roughly $49,000 per year.
The Alberta Capital Finance Authority (ACFA) is the mechanism the provincial government uses to provide eligible municipal, regional, health and education authorities with financing for capital projects.
She said that although a 20-year debenture would mean adding about $987,000 in interest, they chose a longer term to ensure the municipality had enough cash flow to fund operations.
"Recognizing that due to our existing debentures, we are paying close to $880,000 annually in payments, including for the Lac Ste. Anne Foundation, the (Woodlands County public works shop in Whitecourt) and water and sewer extension projects at the Whitecourt Airport. We have to ensure that we have sufficient cash flow,” Chan said, adding that all-in, the county has more than $6 million in existing debentures.
Bachand agreed, saying that debenture payments come out of the operations budget.
"So the higher the payment, the smaller the operating budget unless council decides to increase it accordingly," he said.
Later in the meeting, Bachand said another reason why they chose a longer-term debenture with lower payments is that in upcoming years the municipality will likely have to take on additional debenture debt in 2024 for the repaving of two Whitecourt area roads, including West Mountain Road in 2024 with an estimated price tag of $2.5 million and two or three years after that East Mountain Road.
Reeve John Burrows then started the discussion on ways the municipality could reduce the amount of interest, asking if by increasing the number of payments, they could pay it out early.
Chan said they could, but like an individual with a fixed-length mortgage, the AFCA imposes penalties for early repayment.
Whitecourt Central Coun. Alan Deane said although he would prefer a shorter-term debenture as it would save hundreds of thousands in interest payments, he needed more information about the potential impact before making a decision.
Deane, as well as Burrows, suggested they needed an idea of when the municipality's current $6 million in debentures would be off the books, debenture as well as repayments schedules and how everything fits into their five-year financial recovery plan that council approved in 2019.
Although Chan did not have all of the information on hand, she noted that based on Dec. 31, 2021’s financial statements, there is $1.9 million outstanding in the Lac Ste. Anne Foundation debenture. With the Woodlands public works shop in Whitecourt and a water and sewer extension project, there is an estimated $2.9 and $2.5 million of their debentures, all 20-year-or longer, outstanding, respectively.
As for when those projects are expected to be off the county's books, she said for the public works shop it would be June 2031, while the Lac Ste. Anne and water and sewer debentures mature in September 2032.
She also noted if councillors opted for a shorter 15 or 10-year debenture term, the biannual payments would increase to 112,000 and 142,000, respectively, but added they would see significant interest savings over the life of the debenture.
For the 15-year debenture, the interest accumulated would be about $722,000, while for a 10-year debenture, the total interest accrued over its life would be $466,000.
Blue Ridge Coun. Bruce Prestidge cautioned that council may not want to wait too long and make the decision and miss the May deadline to submit their request for an ACFA debenture.
He noted that the delay to even the September application deadline would delay the project for at least a year.
As a result, Prestidge said they would have to retender the project and would unlikely be able to get the same favourable deal.
"We also don't want to make our payments too high, or in a few years, with the addition of two more major projects and debentures, we will have real difficulties in making our payments," he said.
Burrows interjected, saying while he preferred a shorter debenture term and did not want to stick a future council with debenture payments for several years, he recognized that they were "getting a smoking deal" and did not want to delay the decision to the point of losing the contract with E Construction.
Barry Kerton, TownandCountryToday.com
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