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City’s increased overdraft limit extended
The City of Meadow Lake is prepared to continue leaning on nearly $5 million in borrowed money. During the regular meeting of Meadow Lake city council held Monday (April 27), a bylaw was adopted giving the city the green light to increase the municipality’s overdraft limit from $3 million to $4.5 million for a longer period than originally anticipated.
“The City of Meadow Lake had to increase its overdraft limit from $3 million to $4.5 million to ensure sufficient cash flow between payments and claims for the construction of the Co-op Centre,” explained Asma Qadri, the city’s director of finance, in her official recommendation to council. “The increase in the overdraft has resulted in increased interest expenses and this amount has been paid as incurred and shall be part of the operating budget expenses, and funded through the normal revenue streams.” Originally council voted to increase the city’s overdraft limit from $3 million to $4.5 million effective from Dec. 3, 2024 to Sept. 30, 2025. Later, council adopted another bylaw that increased the term from Oct. 1, 2025 to April 30, 2026.
“As the 2024 and 2025 audited statements are pending, the city is unable currently to enter into long-term debt contracts with our preferred financial institution, RBC, and thus requires the continuation of the increase of its overdraft to remain at $4.5 million for another three months,” Qadri added. “We have completed the borrowing bylaw. As RBC is the city’s current financial provider, and this borrowing is considered ‘bridge financing’ due to its temporary nature, a request for proposals is not recommended.” According to the bylaw, the city’s total amount of existing long-term debt currently sits at $2,967,352, no part of which is in arrears. Back in December, council approved borrowing a total of $3.5 million – $1.5 million to bring its overdraft limit on its operating line back down to $3 million and an additional $2 million to cover cash flow constraints as a result of the Co-op Centre construction costs. The loan’s bi-annual instalments equal approximately $221,060 and will be funded from the naming sponsorships committed to the Co-op Centre recreational facilities. At that time it was also noted sponsorship funding collected and loan instalments would be part of the city’s operating budget for each year from 2026 to 2036.
“It’s not a little bit of a cash shortfall, it’s a significant amount of a cash shortfall,” Qadri said at the time. “We built this building and the construction costs needed to be paid upfront… We were able to carry on by pulling from reserves, but we have maximized this option… The reason we need to borrow and to incur long-term debt is to basically finance the construction costs we’ve already paid for.” A number of Co-op Centre sponsors made significant financial commitments to the city, but they won’t be paying all of their respective commitments at once. It will be over time – in some cases several years – and the city will use this money to pay down its long-term debt. The cost of constructing the Co-op Centre came in at just under $52 million. Meanwhile, the recent bylaw to extend the increased overdraft limit was given all three readings by councillor Conrad Read, was seconded by councillor Mauri Young and ultimately adopted. The overdraft extension is now in place until July 31.