CENTRE WELLINGTON - Debt related to building a new operations centre for the township has left township councillors worried and anxious.
At Monday's special council meeting, Dan Wilson, managing director of corporate services and treasurer, reported that the township has the ability to borrow through Infrastructure Ontario or County of Wellington.
“We looked at two borrowing options that are available to the township: either borrowing through Infrastructure Ontario or Wellington County. The borrowing rates were compared, and at this time Infrastructure Ontario has a lower 20-year debenture rate,” said Wilson.
In the report, Wilson outlined that the total cost of purchase of the property is estimated at $4,044,225. This consists of the purchase price which was $3.9 million, the land transfer tax which was $85,225, and the provision for title insurance and legal fees of $9,000.
The growth share of the land purchase is being funded from growth related debt of $3.7 million, with future principal and interest payments funded from development charges.
The non-growth share is being funded from the land sale reserve, which is $283,096.
“The Infrastructure Ontario debenture interest rate will be set on November 22, 2021,” said Wilson.
“It is anticipated that this rate will be similar to their current 20-year rate of 2.94%. Borrowing $3,761,129 over a 20 year term at 2.94% results in annual payments of approximately $251,400.”
Coun. Bob Foster did not agree with the report, noting that the project was costing the town too much money, which will eventually affect the housing cost.
“I’m also concerned about the high cost of houses, and we’re going to lay on $27 million for this new operation centre and $4 million for the land purchase. This is going to put upward pressure on raising development charges for new houses, which will only increase housing costs. Doing this at a time when many people are struggling with the high cost of housing is unfair,” said Foster.
He also noted that the township’s debt is continuously increasing with expensive projects and that the council is not receiving full and accurate information about this land purchase and operations centre project from the staff.
Foster noted that the council was told that the land purchase was going to be $3.9 million. Yet, during the meeting, Wilson stated that with the financing costs included it will be well in the $5.3 million range rather than the $3.9 million the council was told initially.
“It's 33 per cent more expensive than what we were told initially,” he said.
Wilson answered that the actual purchase price is right in line with what was in the CAO reports from October and other previous reports have indicated that the township was looking at debt financing for the growth related share of those projects.
“We did include the operation centre in the calculation of the current development charge; that was part of the background study council approved for earlier in the year. That was already accounted for in the charge itself,” said Wilson.
Talks of interest rates for the loan also came up during the discussion when Coun. Stephen Kitras asked what the interest on the loan will be and whether the loan is locked in for a period of time or not.
In turn, Wilson was unable to give any amount as he did not have the data with him on hand.
“I feel that this purchase is way over market value and I feel that we’ve signaled the public at large that we’re willing to spend enormous amounts of money on property that can be achieved at a lower cost but we’re spending the maximum amount,” said Kitras.
Council authorized the mayor and clerk to sign a borrowing bylaw with respect to the purchase of 965 Gartshore St.
The vote was 4-3, with councillors Foster, Kitras and Kirk McElwain were opposed to the recommendation.
