Red Deer seeks another $10M to help solve COVID-19 cash flow problem
RED DEER -- Red Deer council has approved first reading of a bylaw that would provide additional funds to help the city through a cash flow problem.
The COVID-19 Response Borrowing Bylaw will provide an additional $10 million to the city’s cash flow above the already $30 million provided through the Short Term Borrowing Bylaw.
“Like many other communities across Canada, we are in a situation where cash flow is temporarily required because of the financial strain caused by the pandemic,” said Chief Financial Officer Dean Krejci.
Krejci said property tax deferrals have had the biggest impact on the city’s cash flow.
The city would be normally receiving a bulk of its property tax payments by June 30. However, due to the pandemic, payments have been deferred to September 30.
Utility payment deferrals have added to the city’s cash flow problems, but the deferral period ends on June 17. On top of the payment deferrals, the city has seen revenue reductions due to recreation facilities being closed, no parking fees in downtown and lower transit ridership.
“Between recreation and transit, that’s two of our larger impacts as far as revenue reductions,” said Krejci.
Krejci said the reopening of recreation facilities may not immediately provide the cash that the city so desperately needs.
“It does bring in some revenue, but with the continued restrictions on the numbers that can gather and social distancing, the revenue that will come in is likely less than what is was previously,” he said.
He added that the cost of running the facilities may also increase due to enhanced sanitization protocols.
“If we are operating the facility, we likely have a lot of the same expense levels and perhaps even increased expense levels due to the additional cleaning protocols.”
All money borrowed to cover the shortfalls must be paid back within three years.
“We understand the city borrowing money under any circumstance, even on a temporary basis, can make the public feel anxious,” said Red Deer Mayor Tara Veer.
“Our priorities are, and continue to be, the health and safety of our community and providing essential services to our citizens while being financially responsible.”
The COVID-19 Operations Borrowing Bylaw will go for its second and third reading at the regular council meeting on June 22.