City of Powell River’s chief financial officer (CAO) is recommending council consider its annual revenue anticipation borrowing bylaw, which provides authorization to borrow money in advance of the property tax deadline.
At the October 28 finance committee meeting, CAO Adam Langenmaier introduced the bylaw, which is meant to ensure liquidity and continuity of services to access short-term borrowing based upon the current year’s anticipated taxation revenue.
“This annual bylaw allows the city to borrow money during the period before property taxes are collected in July [2022],” said Langenmaier. “Normally, our tax revenue comes in during July and we spend it throughout the year. At times you can run thin in March and April and May and there is the ability for municipalities to pass revenue anticipation borrowing bylaws that allows them to access cash from the municipal finance authority for these situations. Once the taxes come in, these loans are repaid.
“The city only pays interest if they take an amount out. So far, we have never needed these loans and have never accessed them. They are good to have in place if something goes sideways that is beyond our control.”
Finance committee chair George Doubt said this is a bylaw that council is getting used to seeing every year and it makes sure there is money in the bank if necessary to pay the costs of keeping the city operating.
“It’s very short-term if we actually borrow any money and it will be paid back when we receive the tax revenue from the taxpayer,” said Doubt.
In a report to the committee, Langenmaier stated that the maximum amount of borrowing allowed for the revenue anticipation borrowing bylaw is deemed to be 75 per cent of all property taxes imposed for all purposes in the preceding year. Langenmaier stated that 25 per cent of the 2021 tax levy would amount to $15,158,883 in allowable borrowing. The amount in the proposed bylaw is $14.5 million.
“The city is not required to borrow any of the funds if it is deemed unnecessary, however, it is prudent to put adequate measures in place if some unforeseen issues arise,” stated Langenmaier.
The committee gave unanimous consent to send it to council for first three readings and to be considered for final adoption.
