Council approves discretionary Legacy Reserve Fund

Saugeen Shores Council officially established a Legacy Reserve Fund on Tuesday, April 24th, and designated it as a Discretionary Reserve Fund to be used for future significant legacy projects which benefit the whole community.

The reserve will be funded through a contribution identified in the annual budgeting process, as well as through funding received from Ontario Power Generation (OPG) and any other contribution opportunities approved by council. The 2019 Municipal budget identifies $665,000 from the tax levy to be contributed to the fund annually in addition to the $750,000 annual contribution approved in 2018.

The 2019 budget was based on the goal of a +/-3% blended tax rate in an effort to smooth tax increases over time while still building financial capacity for large community projects. Recently however, the Town recently received confirmation of the school board rates which came in lower than expected.
Therefore, Council could amend the municipal budget and tax rate to include an additional $165,000 to be transferred to the Legacy Reserve Fund and which would result in an overall blended tax rate of 2.99%. This change would keep the real financial impact on property owners at or below what was previously communicated to the public. The final Tax Rate By-Law has not yet been passed.  The Legacy Reserve Fund would increase approximately $862,000 by the end of 2023 with this change, assuming interest is earned at a conservative estimate of 1.5%.
It was recommended that usage guidelines for the fund identify large, significant legacy projects with a minimum cost of $2 million as potential uses for the money. This could include recreational sports and cultural centres or similar projects as determined by Council. Council then approved a one-time use of the fund for three smaller projects – the Beach House washroom building ($712,291), the extension of the Port Elgin Main Beach promenade($346,654) and the Lamont Pit land purchase($233,835) .

According to Sue Murray, Director of Corporate Services, “If these projects were debt-financed the estimated yearly principal and interest payments based on 3% for a 10-year term loan would be approximately $150,000 annually.  The overall estimated interest costs over the course of the loan would be $205,000.”

Therefore, in order to preserve as much borrowing capacity going forward for future capital projects, staff recommended that the projects be financed on a one-time only basis  through this reserve and not debt financing, which was approved by Council.

Based on projections, Town staff anticipates that the Legacy Reserve Fund should accumulate approximately $11 million by 2023.

“We are the fastest growing community in our region, and we need to ensure our infrastructure and services continue to meet the needs of our community,” says Mayor Luke Charbonneau. “Putting this money aside will help us responsibly finance those major projects when the time comes to carry them out, particularly given that the Province considers us a low-tax, high-income area and, therefore, we receive little in the way of grants.”