Saugeen Shores town treasurer, Daniel Waechter, presented plans for potential funding of upcoming large projects.
“This report sets out the town’s debt financing capability and legacy fund financing,” he said, “and is in combination with the loan for the Lamont Sports Park. The town has built strong fiscal capacity through its contributions to the Legacy Reserve Fund and the case reserves in the fund and the annual contributions to it will likely need to be utilized to achieve the town’s goals over the next several years.”
The 2021 budget listed debt financing as the funding source for Lamont Sports Park Phase 1 and the Town is also developing plans to build a new Aquatics facility, and to construct a new Innovation Park on Concession 6.
Waechter’s report, while summarizing the Town’s fiscal capacity, also included recommendations for the mix of debt and reserve financing to be used on each of these major upcoming projects. “Council approval for these strategies will be sought through future by-laws and budget processes.”
Current estimates for each major upcoming project is as follows:
• Lamont Sports Park Phase 1: $6.0 million (2021)
• Lamont Sports Park Phase 2: $1.5 million (2023-2024)
• Aquatics Facility: $30 million (2023)
• Employment Lands (Innovation Park): $4.0 million (2022)
Other potential future uses of the Legacy Reserve Fund and/or debt funding are:
• Harbour Improvements
• Southampton Town Hall Renovations
• Coliseum Renovations
• Plex Arena Floor Replacement
• Core Infrastructure Funding as identified in the Asset Management Plan (6% increases in total capital spending on core infrastructure)
• Housing Initiatives or Housing Reserve Contributions
• Other Parks, Recreation, and Facilities funding as required The Legacy Reserve Fund continues to accumulate funds and represents an important strategy for building financial capacity.
The current annual contribution to the Legacy Reserve Fund is $2,416,597. At the current contribution rate, the Legacy Reserve Fund would grow to $28,064,238 by 2030, if no disbursements or reallocations are made Waechter pointed out.
Waechter added that to use the legacy fund would require using a “…well-measured and staggered debt schedule where interest rates are locked in at various points in time over varying terms in accordance with town’s debt management policy.”
Vice Deputy Mayor Mike Myatt asked what the repayment schedule would be like if the term were extended to 25 or 30 years. Waechter explained that if amortization were extended to 30 years, debt capacity would increase from the current $49M to approximately $58M – $66M and at 25 years it would be $50m – $56M. “The longer the amortization on the loans the lower the payment and therefore, the lower impact on the town’s borrowing capacity.”
He also added that the longer the term however, the longer the debt, and the shorter the term means the debt capacity comes back much sooner. “Currently, the capacity is there to take on 20 or 30 year loans for the larger projects but, if there are more projects in the immediate future that would require long-term financing, in 10 or 15 years, debit capacity would be slightly increased through higher revenues and as the tax base grows but you don’t get the entire capacity back until the loan closes off.”
Waechter said that staff will continue to bring reports to council for a variety of items in the core infrastructure and asset management plan in future budget discussions. “It’s also hard to know the grant funding that goes into capital from year to year. Road funding for instance relies heavily on federal and provincial funding and long-term projections depend on that funding.”
Mayor Luke Charbonneau said it was good to know that the Lamont Sports Park and the Aquatic Centre can be financed through internal funding. “The municipality is strongly positioned financially to do these important projects … perhaps it would be good to bring to Council a general policy for the legacy fund like we have for the tax stabilization reserve and start to put some parameters around it as to what can be contributed and what can be held. Maybe we should look at the legacy fund and what it’s for and our intentions for it. The previous council started it around the Aquatic facility … this fund is serving the tax payer well but we need a really solid reasoning of what we are doing with it, where we are going and how we are going to benefit the community with it. The fund has matured enough now that we can start to think of how we are going to use it.”
