BARRHEAD – The Barrhead Exhibition Association and Agricultural Society hope the County of Barrhead will loan them $875,000.
Whether they do or not is still in the air.
On Sept. 5, councillors gave first reading by a vote of five to two to Bylaw 5-2023, which, if passed, would allow the society to borrow up to a maximum of $875,000 for a term of up to 20 years at an annual interest rate of 5.13 per cent
(the current Local Loans Authority rate.
Reeve Doug Drozd and deputy reeve Marvin Schatz were opposed.
In a letter to council, society president Jackie Miller states the society would use the funds to purchase six parcels near the organization's existing rodeo grounds for future expansion, including such amenities as (but not limited to parking, campground facilities, livestock stalls or pens, and changing the access to their existing grounds for improved accessibility and safety.
Miller also noted that through its various ongoing events, such as the Blue Heron Fair Days, the demolition derby, and the annual 4-H beef show, the ag society supports the county's economic development and diversity objective by attracting visitors and money from outside the community.
She also noted that the ag society, again through its activities and support other local non-profits, promotes a rural lifestyle and providea substantial donation through fundraising efforts to the construction costs of the Agrena and aquatics centre.
Finance director Tamara Molzhan said the municipality has the authority under Alberta's Municipal Government Act (MGA) to loan funds to not-for-profit organizations through a bylaw as long as the money is for the benefit of that municipality.
And if council agrees, they can only lend it via a bylaw, she said.
Molzahan noted the ag society owns a 13-acre property in the Town of Barrhead that includes an exhibition hall, agricultural barn and outdoor rodeo arena.
Molzahn added that as part of the agricultural society bylaws, they can borrow funds for capital projects. However, anything over $250,000 requires authorization from no less than a two-thirds majority vote, which they received at a special Aug. 30 meeting. The vote to borrow the necessary funds was unanimous, with about 40 members in attendance.
Molzahn then listed several ways the county has helped support the ag society, including having a council representative on its board, providing work in-kind donations, specifically the $11,000 in equipment and labour in dirt work to transform the Barrhead Agrena to a rodeo arena for the Wildrose Rodeo Association (WRA) Challenge finals.
Unfortunately, the society lost its bid to host the finals following last year's event. This year will be the first year since 1989, not counting the 2021 and 2022 pandemic years, that Barrhead has not hosted the WRA Challenge.
In addition, Molzahn noted the municipality has also given the ag society $6,750 through the community grants policy to offset the costs of hosting Blue Heron Fair Days.
She added that there is precedent, saying the municipality has provided loans to organizations, referring to $135,000 and $115,250 loans to the Barrhead Golf and Recreation Society in 2008 and 2020. The society has since repaid the 2008 loan.
Molzahn noted that as part of the request, the ag society has provided the appropriate financial documents which show their ability to repay the loan.
The request for decision (RFD) states that the ag society repaid a $200,000 loan for renovations at Babilitz Hall, taken out in 2019 in less than two years.
Molzahn also noted that the ag society has no outstanding loans and that their existing property has an estimated value of $2.9 million.
"They do have a mortgage in place to support an overdraft line of $200,000, none of which has been used, and their financial statements show that they have enough available cash to support repayment of debt this size," she said.
Molzahn said that if councillors approved the bylaw, based on a 20-year loan, the ag society's annual payments would be $70,988.21, and they had the option for prepayment anytime without penalty.
She noted that the funds for the loan, if approved, would come from the community organizational reserve fund. However, Molzahn pointed out that the fund needs more money, and the county would have to transfer roughly $770,000 from its $2.5 million unrestricted reserves to shore it up.
"Regardless of where the funds come from (under the MGA), we also have to consider our debt limit, which at the end of 2022 was just over $14 million,” she said.
Drozd asked if the ag society planned to consolidate any of the lots.
"Because if things go south and the ag society cannot repay the loan, would we take it back?" he asked.
Molzahn wasn't sure of the ag society's plans but said that multiple properties should be available, suggesting the society could sell the property not in their plans.
Earlier in the meeting, she noted that the lots are currently zoned as residential and that the society would likely have to work with the town to rezone them to fit their plans.
Molzahn also noted that if the ag society were ever to dissolve, they must first pay all their liabilities under their bylaws.
Schatz said while he supported the ag society's efforts, he questioned whether the municipality should be in the loan business.
"There are other lending institutions that do this," he said. "(The county) is looking at potentially borrowing money at some point."
Schatz referred to a bridge repair project that the province denied their application for a Strategic Transportation Infrastructure Program (STIP) grant, saying traditionally, the county only moves forward with bridge repairs once they've secured that grant.
"Why would we go out and borrow money for bridge and other projects just to loan $870,000 to the ag society?" he asked.
Drozd said while he understood why the ag society would want the property immediately adjacent to the rodeo grounds, he wasn't "comfortable" with the ag society buying all six lots.
He also asked if the society had approached the town with a similar request.
Coun. Bill Lane, council's ag society board rep, said he supported their request.
"If they don't get this land, it could really pose some difficulties when they do want to expand because there is nowhere for them to go," he said. "And they've always had a good relationship with the town and county, and they do so much good work in the community and support so many other organizations."
Schatz, Drozd and Coun. Walter Preugschas said they would be more inclined to support the request if the county was the only option.
Molzahn said that the ag society had talked to the institution that holds its mortgage, and they seemed favourable to granting the loan.
"I think they know they would get a better interest rate from us. That is why they are open to the amount," she said.
In a subsequent interview, ag society treasurer Brenda Visser said they have been in negotiations with the landowner for two years and confirmed that they had spoken with multiple financial institutions, all of which were willing to give them a loan.
"We definitely had other options, but it is about being fiscally responsible and looking for the best interest rate, and we knew the county could give us a better one," she said.
Visser also noted that the society had made a similar request from the Town of Barrhead and was told it wasn't possible.