Masters says city’s spending critical to avoid infrastructure ‘crisis’

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Answering criticism about the level of debt needed for multiple big capital builds, Regina Mayor Sandra Masters called it necessary pain for a city with a “billion-dollar infrastructure problem.”

“The problem is we’ve reached a crisis point and I think right now we’re in a position to avoid the crisis,” she said in defence of a $577-million capital spending plan over the next five years.

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The mayor’s comments followed a drawn-out discussion Wednesday by executive committee on borrowing $185 million for a Water Network Expansion (WNE) on the east side.

In reference to that discussion, Masters said city council “got serious about water utility.”

Speaking afterwards, she agreed this administration has been left to play catch-up from past council decisions not to spend big on infrastructure. Masters called the dilemma “a wicked sort of problem to deal with” as the city has grown.

“Do I wish 20 years ago they had methodically put in dedicated mill rates for this? I certainly do,” she said. “But the reality is that we can’t have a failure. We can’t continually be undersized and underserved if were going to look for growth.”

Asked to describe the state of Regina’s civic assets, Masters said: “Chronically underfunded infrastructure, full-stop.”

As of 2020, the city’s asset inventory had a total replacement value of $12.9 billion, 17 per cent of which ($2.1 billion) was assessed to be in poor to very poor condition per a 2022 state of infrastructure report.

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At that time, the 20-year capital funding gap was projected at $655 million, but that didn’t include costs for a new aquatic centre, Central Library or a replacement for the Brandt Centre, all of which are now on the radar.

Those projects add another $300 million at minimum, raising the gap to at least $955 million — and likely more, noted Masters, as post-pandemic construction costs have ballooned at least 20 per cent.

The city has committed to begin at least five major capital projects by 2028, chewing up nearly all of its available $660 million in debt room.

City administration has made it clear over the last year of financial reports that surplus reserve funds are committed through to 2028. Some investment income is available, but it’s not considered a stable source for multi-year spending.

“We have alternative options that haven’t been financially modelled out to continue to keep the mill rate low,” said Masters, hinting at the potential to pull funds from the federal housing and infrastructure program next year.

The idea of increasing the city’s debt limit had some city councillors raising eyebrows this week, especially if it requires a mill rate increase to property taxes to cover the cost of servicing more debt.

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“Are we taxing people out of our city?” wondered Coun. Lori Bresciani (Ward 4), in a discussion about property tax revaluations on Wednesday.

Asked later, Masters said in contrast to similar-sized prairie cities like Saskatoon or Winnipeg, Regina’s property taxes are lower and the city’s debt volumes are “really quite healthy, as it relates to debt per capita.”

Regina currently has a tax-supported debt ratio of 36 per cent, which is a measure of debt affordability that considers how much debt will be repaid by general operating revenue collected from tax dollars.

Saskatoon, comparatively, had a ratio of 27.9 per cent at the end of 2023. Winnipeg reported a ratio of 79 per cent, Calgary a ratio of 65 per cent and Edmonton a ratio of 105 per cent in 2022.

Borrowing for the east-side water project, if approved next week, will push Regina’s ratio to 60 per cent. By using all $660 million in debt, which administration warned will be needed by 2028 unless other funding lands, will move the ratio to 73 per cent.

“I think the most significant thing that everybody should be concerned about is hundreds of millions of dollars in infrastructure deficit,” Masters said.

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“This is an effort to make sure that we have money in place to fund the infrastructure projects necessary to grow and to intensify.”

lkurz@postmedia.com

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