Council approved $300-million transfer from rainy day fund to pay for major projects: report
Meghan Potkins, Calgary Herald
Updated: April 26, 2019
Councillors approved a $300-million withdrawal from the City of Calgary’s rainy day fund in order to seed a new major capital project reserve expected to help pay for an expansion of the BMO Centre, a new arena, the first phase of Arts Commons and a multi-sport field house, a city report has revealed.
The reserve, currently totalling nearly $400 million, is part of a larger financial strategy approved behind closed doors by council last month to fund major long-term projects. The entire suite of projects is valued at approximately $1.5 billion, though a significant portion of the costs for the projects could come from other levels of governments or from private sector partners.
A report heading to council Monday outlines the sources of the “initial funding” for the projects.
The most significant source is a $305-million transfer from the city’s fiscal stability reserve, the so-called rainy day fund created to provide Calgary with a “contingency for urgent situations with significant financial implications.”
As a result of the transfer, the sustainability reserve is expected to be reduced to the minimum balance allowed under council policy — a level equivalent to approximately five per cent of the city’s operating expenses, according to comments made by the city’s chief financial officer in March and echoed by several council members.
The report reveals additional funds came from three other sources: $19 million from the lifecycle maintenance and upgrade reserve; $37 million from the budget savings account and $37 million from the tax loss provision reserve.
The city has not said what the remaining balances are in those reserves, but Mayor Naheed Nenshi dismissed concerns Friday that council was being irresponsible in diverting cash for major capital projects.
“What we did is we kind of went through all the drawers and found the crumbs in various drawers where we thought some reserves were a little bit too much — where the balance had maybe grown a little more than they were supposed to grow,” Nenshi said.
“It doesn’t mean it’s painless. It does mean that it’s taking away future flexibility. But again, when you’ve got cash for a rainy day — and it’s raining — you may as well use it.”
At the start of 2019, the city had more than $2 billion spread across a number of operating and capital reserves.
A handful of council members objected on March 4 when councillors voted 11-4 to fund the four major projects, including councillors Peter Demong, Jeromy Farkas, Druh Farrell and Evan Woolley.
Council members have previously been unable to publicly discuss specifics of the financial strategy, which was first presented at an in camera meeting, but Monday’s report from the chief financial officer is expected to be discussed in public.
Full story at:
https://calgaryherald.com/news/local-new...ay-fund-to-pay-for-major-projects-report