Below-market rate loans no longer offered to local authorities

Alberta Municipalities was surprised and disappointed by the Government of Alberta’s recent decision to stop offering below-market rate loans to local authorities. The provincial government quietly informed municipalities in December 2021 that it has changed its position and increased interest rates for new loans to “better reflect the market cost of borrowing for local authorities.” This decision backtracks on promises made to municipal governments in 2019 when the province chose to dissolve the Alberta Capital Finance Authority (ACFA).

Considering the impact this decision will have on municipal budgets and local infrastructure plans, Alberta Municipalities has sent a letter to the Government of Alberta seeking background information on the decision to dissolve the self-supporting ACFA and what fiscal factors will need to be in place for the provincial government to reinstate below-market lending rates for Alberta’s local authorities. 

Based on a member resolution, Alberta Municipalities has also requested a meeting with representatives from Alberta Finance to discuss the possibility of a regulatory environment in which municipalities could issue bonds to generate capital for community infrastructure. We will update members when more information is available.