WHEREAS Section 21 of the Alberta Capital Finance Authority Act provides that: ‘The business of the corporation is to provide local authorities that are its shareholders with financing for capital projects’. AND WHEREAS Section 1(g) of the Alberta Capital Finance Authority Act defines local authority as: ‘a city, an educational authority, a health authority, a municipal authority, regional authority or a town’ and does not include Seniors’ Foundations.. AND WHEREAS the stated mission of the Alberta Capital Finance Authority is: ‘To provide local authorities within the Province with flexible funding for capital projects at the lowest possible cost’. AND WHEREAS Seniors’ Foundations are public institutions, publicly funded created for the public benefit. AND WHEREAS Section 7(1) of the Alberta Housing Act provides Seniors’ Foundations with the authority to requisition municipalities, for which the Foundation provides lodge accommodations, the amount of the Foundation’s annual deficit. AND WHEREAS the only difference between the local authorities, as defined in the Alberta Capital Finance Authority Act, and Seniors’ Foundations is the age of the clients served.
THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and counties urge the Province of Alberta to amend the Alberta Capital Finance Authority Act to include Seniors’ Foundations.
Currently, the Alberta Capital Finance Authority can provide financing for a 25-year term at a rate of 5.051 per cent. The best that Seniors’ Foundations can obtain at the current time is about prime, which is currently 6 per cent. If Foundations could finance through the ACFA, at the current rates, Foundations could save $6,855.06 annually in interest for every $1,000,000 borrowed for 25 years. Municipalities have been borrowing from the Alberta Capital Finance Authority on behalf of Seniors’ Foundations in order to get access to these better rates. The effect of this, however is that these borrowings serve to reduce the debt limit of the municipalities (Alberta Regulation 255/2000 – Debt Limit Regulation). This could limit municipalities future capital expansion plans. Amending the Alberta Capital Finance Authority Act to include Seniors’ Foundations would benefit: – The Province, as this could reduce the demand for amount of funding from the Province for seniors’ lodges. ‘ Seniors’ Foundations, as this could reduce the cost of financing construction of seniors’ lodges – Municipalities, as would no longer need to borrow on behalf of Seniors’ Foundations, thereby reducing their debt limit and limiting their future capital expansion plans. – Property tax payers, as this could reduce the property tax mill rate required to finance the Seniors’ Foundation annual requisition. – And finally, Alberta seniors, as this could reduce the cost of accommodations for seniors in lodges, or free up additional funds for constructing more seniors’ lodges.
The AAMDC has no resolutions currently in effect with respect to this issue. However, resolution 31-05S regarding Seniors Foundations/Lodges Requisitions urges the Government of Alberta to amend Section 7(2) of the Alberta Housing Act to change the basis of determination for municipal requisitions to a per centage-based system with 50 per cent determined by population and 50 per cent determined by equalized assessment. The government’s response was that the increase of $12 million in Budget 2006 for seniors housing at this time are serving as the government’s official position on the matter. No new changes to the requisition system are currently planned.
The Government has committed to reviewing the issues, but without any reference to timelines or specifics of the review. It is not clear if the review is of the Municipal Government Act and borrowing limits or of the Alberta Capital Finance Authority Act, which is what the resolution requests. The AAMDC will continue to seek clarification on this issue through formal ministerial meetings. Resolution 1-07S also addresses Seniors Foundations and the Alberta Capital Finance Authority Act.