Guelph City Council’s Committee of the Whole voted unanimously Monday to guarantee a $2 million loan the Elliott Community is seeking for upgrades to its retirement and life-lease buildings.
The Elliott, which needs council’s approval before borrowing money from an outside lender, will await final council approval before seeking the loan through a lending institution.
The money is needed primarily for sprinkler and roof upgrades.
Representatives of The Elliott, which has operated in Guelph for over 100 years, were at the Committee of the Whole Monday to answer questions from council.
Councillor Christine Billings asked city staff it if might not be better financially for The Elliott to borrow the money from the city, but was told that lending institutions could offer pretty much the same rate the city could.
The city has loaned The Elliott money in the past, a $16 million mortgage.
City deputy CAO Trevor Lee, who used to be CAO of The Elliott Community, said that although The Elliott Act does not specifically require the city to be the guarantor for its loans, lending institutions interpret that it must before loaning The Elliott money.
Guaranteeing of the loan has been identified as “low risk” by city staff.
Mark Coburn, Director of Finance at The Elliott, said they do not have a reserve fund set aside for such costs and that they finance the needs as they arise.
"To generate $750,000 would take a period of time. These repairs are something we need right now," Coburn said.
Establishing a reserve fund could also result in higher costs for residents at The Elliott, council heard.
City treasurer Tara Baker said The Elliott has already been asked to "consider their debt strategy" in their upcoming strategic plan.
The Elliott is a board of the city that is run by a board of trustees.
A staff report says that backing the loan would not have any direct implications on the city’s financial picture, but would have impact on the city’s consolidated financial statements and the potential that external loan providers would be repaid before the city if The Elliott runs into financial difficulties.