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County may borrow cash for Westlock Foundation

Westlock County will look into helping the Westlock Foundation fund the Pembina Lodge expansion by indirectly financing the project. The expansion, which is scheduled to begin this summer, will need about $7.

Westlock County will look into helping the Westlock Foundation fund the Pembina Lodge expansion by indirectly financing the project.

The expansion, which is scheduled to begin this summer, will need about $7.6 million of financing, foundation CEO Marilyn Lannon told council at its March 29 meeting.

Although the Westlock Foundation is essentially a municipal organization — funded through municipal requisitions — it does not have access to the low lending rates offered by the Alberta Capital Financing Corporation.

Council passed a motion to have administration examine taking on the debt on their books, although the foundation would still be responsible for paying off the debt and all the interest.

The downside for the county would be that they would have to hold the debt on their books, and it would count towards their debt ratio. Based on Alberta’s Municipal Government Act, each municipality can only hold a limited amount of debt — equal to 1.5 times its annual income.

Westlock County currently can have a debt of more than $20 million and only carries a debt of about $4 million. By taking the foundation’s debt on its books, the county would still have more than $10 million available to borrow if a situation arose where it was necessary.

If the county takes on the debt the foundation could finance the project at a significantly lower interest rate, which could save hundreds of thousands of dollars in the long term, Lannon said.

Coun. Maureen Kubinec, who is also co-chair of the foundation, made a motion to approve the foundation’s use of the county’s debt capacity.

Coun. Mike Cook asked to amend the motion, which will see administration examine the possibility.

“I’m for it, don’t get me wrong,” he said.

“I’d just like to make sure there’s no consequences down the road.”

CAO Ed LeBlanc agreed exercising caution was a good idea.

“We have to do our due diligence on it,” he said.

Reeve Charles Navratil said he wanted to make sure the other members of the Westlock Foundation — the Town of Westlock, the Village of Clyde, and the MD of Lesser Slave River — knew the county was, in essence, doing them a favour.

“It’s saving them money too, because they all pay it through the requisition,” he said. “I don’t want that to go unnoticed.”

“They’re not willing to step up to the plate and put in their 35, three and two per cent,” Navratil said.

Westlock town council discussed the possibility of taking on the debt at a meeting earlier this year, but agreed that with the costs associated with the Spirit Centre they were not in a financial position to be able to do so.

Council also passed a motion to accept the foundation’s financial statement, which Lannon presented at the same meeting.

It shows an operating deficit $85,000 for 2010 and a multi-year deficit of $915,000.

“What’s the long-term plan to recover the $915,000?,” LeBlanc asked.

Lannon replied that at this point, there is no long-term plan to address the shortfall.

Each individual facility operated by the foundation — Pembina Lodge, Smithfield Lodge, and Smithfield Supportive Housing — show operating deficits between $75,000 and $135,000 for 2010. The deficit was partially mitigated by provincial grants and municipal funding.

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