Council to consider borrowing $22 million for organics processing facility

Saskatoon’s city councillors will contemplate a plan to borrow more than $22 million to construct an organics processing facility over the next two years.

A previous agreement with Green Prairie Environmental to provide organics processing for the city in the RM of Corman Park fell through in April of 2023 after councillors there voted 8 to 1 to decline a discretionary use application from the company.

Since then, Loraas Disposal has been processing the material from Saskatoon’s green carts.

According to a report from the city’s administration, a 10 per cent loan down payment would be required to secure funding for a new facility because construction would likely begin this year. The funding plan is expected to be discussed at Wednesday’s meeting.

A green cart delivered March 29, 2023. (Lara Fominoff/650 CKOM)

But that money is not in the 2024 operating budget.

“As borrowing for this project is being requested outside the Multi-Year Business Plan and Budget process, the 2024 operating budgets are not sufficient to fund this down payment; however, this project must be initiated in 2024 if operations are to begin in 2026,” the report read.

That means an exemption could be requested at next week’s council meeting. The report indicates that exemptions have been granted in the past for unique projects outside of the budget process and business plan.

Speaking with reporters last week, Mayor Charlie Clark said that no matter what council does, it’s going to cost money.

“This is a decision that will potentially provide us service for decades,” Clark said, noting that the city can borrow at low rates and find efficiency through scale.

If the city doesn’t build its own facility, the mayor the long-term financial impact would be even greater.

“We’re trying to keep the cost down as much as possible for residents when it comes to the fee for those organics bins,” Clark added.

According to the city’s report, the loan could be paid back over 20 years. If that happens, green cart fees could rise from the current average of $7.29 a month up to $8.32 each month by 2026.

If the loan amortization is 10 years, those green cart fees could go up to $9.10 per month by 2026.

If council decides to borrow the money, payments would be around $1.7 million per year. About 30 per cent of that would be funded through user fees and property taxes.

Last August, council approved internal borrowing of $13 million to cover the $18 million cost of citywide snow removal in 2023. The internal loan meant the money came from funds the city would likely have otherwise invested elsewhere.

Another $3.5 million was also borrowed internally in August of 2023 to purchase new residential garbage bins.