The City of Whitehorse is planning to borrow $10 million to help pay for the construction of the operations building (pictured), a move that has one concillor questioning why they don’t just use reserve funds. (Crystal Schick/Yukon News)

The City of Whitehorse is planning to borrow $10 million to help pay for the construction of the operations building (pictured), a move that has one concillor questioning why they don’t just use reserve funds. (Crystal Schick/Yukon News)

Councillor questions borrowing plan

City of Whitehorse would borrow $10 million for operations building

A Whitehorse city councillor is questioning a move that would see the city borrow $10 million for the operations building, despite more than $35 million projected to be in reserves at end of the year.

Coun. Samson Hartland, who voted against the original plan to borrow for the construction of the operations building, raised the issue at council’s Nov. 16 meeting after Brittany Dixon, the city’s manager of financial services, brought forward a report detailing the plans for borrowing.

Hartland argued that the city should be using its reserves to mitigate any borrowing costs in the future. It’s projected more than $35 million will be in reserves by the end of the year. The expected higher amounts in reserves are due to projects that were delayed, a reduction in spending on some initiatives and increased transfers to reserves based on funding formulas through the territory’s municipal grant and tax base growth.

“I’m not entirely convinced that just because we can borrow $10 million is the best thing to do,” Hartland said.

Dixon replied to Hartland’s concerns by noting the importance of having reserve funds available so the city can respond to emergencies and in case there are any revenue shortfalls. She also highlighted the uncertainty of the economic impact coming from COVID-19.

“We’re just not sure what we might face in the future,” she said.

In her report, Dixon detailed the borrowing plans that come two months after the 11,567-square-metre building off Range Road officially opened. The building is home to a number of departments including engineering, operations, transit and human resources. The structure cost a total of $54.6 million.

While much of the funding for the building came from the city’s portion of gas tax funding and its own reserves, Whitehorse city council voted in 2017 that the city would borrow the remaining funds. That bylaw authorized up to $18.8 million in borrowing over a 20-year period with the interest rate not to exceed 2.653 per cent.

With the building now complete and the final numbers in, the city is getting set for the finance agreement with TD Securities that is less than originally anticipated.

“The original project contemplated borrowing of $18.8 million at an annual estimated debt servicing cost of $1.5 million,” Dixon told council. “The annual cost was deemed to be manageable through an allocation from reserves.

“Through reduced spending measures, combined with project clarification and additional external funding commitments, borrowing has been reduced to $10 million, with an anticipated annual debt servicing cost not to exceed $0.7 million.”

While the loan with TD Securities will be subject to renewal every five years, the initial interest rate would be set at 1.825 per cent.

The proposed terms for the loan also include the ability to pay it off at any time.

It’s expected the finance agreement will be signed in about a month.

Meanwhile, gas tax funding accounts for $23.8 million and reserves have funded $20.7 million for the construction of the operations building.

While the operations building is finished, efforts are underway to plan for and build a second access road to it.

Coun. Dan Boyd clarified with Dixon that is a separate project which will require approval through future city budgets.

Contact Stephanie Waddell at

Whitehorse city council

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