By Steve Hubrecht
The District of Invermere adopted a bylaw on February 28, allowing the municipality to borrow up to $900,000 from Kootenay Savings Credit Union, if needed.
The first line in the bylaw is attention getting without a larger context. “Whereas the District of Invermere may not have sufficient money on hand to meet the current lawful expenditures of the municipality.” That the line of credit exists is a matter of practicality, much like some families that keep a line of credit for emergencies and the unforeseen.
Invermere chief financial officer Karen Cote and Invermere Invermere chief administrative officer Andrew Young explained the district’s financial position is solid and not forecast to have a revenue shortfall or be blindsided by unexpected capital expenditures.
The line of credit is a solution to a problem that hasn’t happened.
“You could think of it as a form of insurance,” said Young. “It’s very common for municipalities throughout B.C. to have a revenue anticipation borrowing bylaw for, as the cliche goes, a rainy day that we hope never comes.”
District documents accompanying the bylaw twice use the term “unlikely” to describe the chances of district bank accounts being in overdraft or of needing the line of credit for operational cashflow.
Maintaining the line of credit is free for the district, as long as it doesn’t actually use it, said Invermere mayor Al Miller.
The district has had the line of credit since 2005, and is required by the credit union to adopt a new revenue anticipation bylaw each year. The line of credit is a worst-case-scenario backup plan: the district has never touched it in the past, and does not anticipate doing so in the future, said Young
The bylaw and the line of credit are “a tool available for local governments that allows municipalities to borrow money for a short term to continue municipal operations while waiting for anticipated revenue (such as property taxes) to be received,” said Cote.
