Town council approved first reading of the borrowing bylaw that was supposed to have been drafted and approved before the North Bridge replacement and road realignment project began.
The decision was made Tuesday, Oct. 27 during a regular meeting after council heard from Sandra Lund, acting director of corporate services for the Town of Ponoka, on how the borrowing process will work. The bylaw sets a clear outline of how the town will borrow and pay back the $5 million of the $5.45 million project.
Lund said $100,000 is to come from reserves and $343,00 from infrastructure grants. As the project has already begun, and a bylaw was needed before that time, Lund said she had spent much of her time working closely with Municipal Affairs to ensure all the missed steps had been caught up with.
First reading of the bylaw is the first step while the town then must advertise for two weeks before passing second reading of the bylaw. After the second week of advertising, residents can petition the town, says Lund.
“Nov. 12 will start with a 15 day petition period … That will bring it back to the first council meeting in December for second and third reading,” said Lund.
If and when the bylaw is approved, money will come from the Alberta Capital Finance Authority (ACFA) with an interest rate of 3.7 per cent over a 40-year term, which amounts to $240,826 per year. After third reading, a bylaw is considered valid after 30 days if no application has been made to the Court of Queen’s Bench to have it declared invalid.
Coun. Loanna Gulka asked about the petition process. “If there are people not in agreement to this … my understanding is that a certain percentage of the community must petition.”
Ten per cent of the community must petition against the expense for it to be invalid, replied Lund.
“If we were to run into that,” said Gulka, “I’m just throwing this out there, what would happen to us?”
Council could initiate a plebiscite — a direct vote of all members of the electorate on an important public question, offered Mayor Rick Bonnett. The town could also continue the project under a three-year loan, however, he did not appear to favour that idea. “That would affect our budget going forward,” stated Bonnett.
Civil liability of councillors
Under the current circumstances, there may be civil liability for councillors stemming from the borrowing bylaw.
The extent of that liability is laid out in the Municipal Government Act (MGA), in this particular case section 241 and sections 248 to 251.
When it comes to large capital projects that would see debt with a term of more than five years, a municipality may only resort to borrowing if authorized by a relevant bylaw.
The civil liability to a municipal council falls under three areas:
If it makes an expenditure that is not authorized; (Those authorizations are stated as being included in the operating, interim or capital budget, for an emergency or if legally required to be paid)
Votes to spend money obtained under a borrowing for something other than was intended;
Votes to spend money from a grant for something other than what the grant was intended for.
Further, a council is required to bring a procedure forward to authorize and verify expenditures. It should be noted the 2015 budget did prepare for the potential expense of the project but no money was set aside.