COVID-19 and a roof repair that more than doubled in cost by the time it was fixed has forced The Elliott Community retirement and long-term care facility to ask the city for some additional financial backing.
At Monday night’s brief (13 minute) meeting of Guelph City Council, council voted to guarantee double the amount of a $2 million loan The Elliott originally asked for two years ago.
The city is not providing the loan, only guaranteeing it.
The city initially agreed to guarantee a $2 million loan in 2018 for capital repairs, notably the significant roof work. That project was supposed to cost $800,000, but The Elliott said that increased material costs and an increase in the amount of repair needed put the eventual bill at $2 million.
That ate up all of the $2 million loan guaranteed in 2018 and left no money for other needed capital repairs or legislated COVID-19-related expenses.
Adding fuel to the fire was the fact that a number of residents in the retirement section of the facility moved out when COVID-19 hit, temporarily affecting its overall cash flow, said a letter from The Elliott CEO Michelle Karker.
As a result The Elliott says it has “come to a standstill” in its capital upgrades.
“In the event that the city does not provide the approvals being sought, it could result in The Elliott facing legal implications and potential fines due to non-compliance,” said a staff report to council recommending the loan that was quickly approved Monday night.
The city contributes approximately $1.2 million annually to the operation of The Elliott and has an outstanding $14.4 million loan it gave The Elliott to fund the redevelopment of it’s long-term care facilities in 2008. That loan matures in 2036.
City staff advises backing a third-party loan rather than loaning the facility any more money itself.
The guarantee by the city is contingent on “the rates the loans are secured for are competitive; details of the cash treatment of the past capital contributions intended to fund Long Term Care are provided; accelerating debt repayments is considered as part of their next strategic plan.”
The staff report says that the additional guarantee should not affect the city’s credit rating but points out that should The Elliott run into financial difficulties, the city will be required to finance any outstanding debt obligation.