City council approved during Executive Committee on Monday to begin the process of establishing a $15 million line of credit.

The city has never held a line of credit before. Historically, the city used the return on high-quality bonds in place of a line of credit to the tune of about $10 million.

That isn’t the case anymore, as the city holds investments in GICs and equities now.

The report to council, however, was done before the COVID-19 pandemic hit.

“The unforeseen pandemic does underline the need for a line of credit, even if it is something that doesn’t happen very often,” Director of Financial Services Brian Acker said. “It is a necessary thing for most organizations to have.”

Acker said cities like Prince Albert, Swift Current, Saskatoon, and Regina all have lines of credit in place.

With 16 consolidated bank accounts, the line of credit would only come into effect if those accounts become overdrawn. Acker said the intent is to never have to use the line of credit, but have it as a safety net.

Acker added that they want to get the process started now because it takes a while to finalize everything.

“It’s probably about a two-month process in terms of the initial council approval as we have tonight, then it will be ratified by council, then we have to bring back a borrowing bylaw and the borrowing bylaw must receive three readings,” he said.

With the COVID-19 outbreak, interest rates have dropped as well. Acker said they would be getting Scotiabank’s prime rate less 0.75 per cent for an overall interest rate of 1.7 per cent.

The motions were passed 6-1 with Coun. Brian Swanson as the only one opposed.