Temporary Cash Flow Problems Has Airport Authority Requesting Loan Guarantee Extension
By Robert Thomas
Temporary cash flow problems brought on by the Canada Revenue Agency (CRA) for the Moose Jaw Municipal Airport Authority (MIMAA) had the group asking Council to extend their runway upgrades’ loan guarantee (under Bylaw 5643) from April 30th until December 31st, 2022.
At their October 24th Council meeting Council voted 6 - 1 (with Councillor Dawn Luhning opposed) in favour of MJMAA’s request and extending their loan guarantee.
The Airport Authority had decided to seek interim funding through JGL - instead of a bank - to fund the airport upgrades with the City backing the loan.
As part of that funding arrangement the City had to provide a $1 million loan guarantee. The loan guarantee was touted as not costing the City anything as the funds would be forthcoming from the Federal government under the ICIP (Investing In Canada Infrastructure Program).
The interim funding was necessary because the federal government pays their $1 million contribution 90 days after paid invoices are submitted.
The loan guarantee would cost the City nothing but did have to be reported against their debt limit the Province imposes on them.
JGL is a municipal airport user and a benefitted from the runway upgrades as they can now land their corporate jet in Moose Jaw instead of using facilities in Regina.
Previously the group had requested an extension until October 31st but now are asking until December 31st, 2022 because of slower than expected GST remittances from the Canada Revenue (CRA) and the 90 days for the MJMAA to receive repayment for upgrades at the Municipal Airport.
A report to Council states the MJMAA is owed a GST Refund of $127,404.00 but the refund cheque was held up due to the CRA auditing MJMAA’s GST return and the CRA further requesting the Airport Authority file a Corporate Return RC0001.
In a letter to Council Greg Simpson wrote “BTN (Benson Trithardt Noren Professional accountants) said this is an unprecedented request as we have not had to file the RC0001 since we are a nonprofit. We did receive our GST return last year, so we are perplexed by the new unpredictable expectations from the CRA.”
An RC0001 tax return is filed by a For Profit corporation while a non-profit corporation files a T1044 Non-Profit Organization (NPO) Information Return.
The Airport Authority expects the refund to be forthcoming once their problems are sorted out with the CRA.
Council Discussion
“This is a long process we have been working on with the Airport Authority and they were able to obtain a grant from ICIP program to upgrade the runway in a number of ways and other work out there,” city manager Jim Puffalt told Council.
“As you recall you have to spend the money and then request a reimbursement and then the federal government refunds the money to you. So that is what they are waiting for,” Puffalt said.
Mayor Clive Tolley said he had spoke to MJMAA chair Greg Simpson who told the Mayor the MJMAA has “been waiting since May for a sizeable GST rebate cheque from the Government of Canada.”
“And he (Simpson) is quite confident the Airport Authority is in good financial shape and they happen to have a cashflow problem right now because of the Federal government not returning their GST rebate. So this is a temporary measure to get them through until they receive that cheque,” Mayor Tolley said.
Councillor Crystal Froese asked if the Airport Authority was still waiting for reimbursement for the runway upgrades.
Pufflat replied “they are still waiting to be reimbursed.”
The report to Council mentioned that the Airport Authority’s contractor had completed grass reseeding and the Airport Authority could now receive reimbursement for earthwork and electrical contracts. The repayment could take up to 90 days to receive.
Councillor Heather Eby said she was willing to support the motion however “the Mayor just said something that kind of made me slightly uncomfortable.”
“He said they are ‘quite confident’ and I would rather know they were 100 percent confident. Quite confident doesn’t give me confidence,” Councillor Eby said.
Mayor Tolley responded it was his error.
“That would be my error in English. They are very confident but they are frustrated with the federal government. They just got an audit from a local accounting firm and everything is in great shape financially and they have been waiting for a significant time, more than they should be waiting, for a payment from the federal government,” the Mayor said.
There were no other speakers to the motion.