Minto to borrow $ 5 million for major projects next year
Minto’s board agreed to borrow $ 5,160,000 for next year’s expenses at Tuesday’s board meeting.
Gordon Duff, Township Treasurer, presented the 2021 capital budget revisions and long-term borrowing report to council, which are expected to affect the 2022 budget and tax increase.
“We have four main projects which are quite important. One had already started and that is the renovation and expansion of the Palmerston Recreation Center, ”said Duff.
“This is part of the Investing in Canada (PICI) infrastructure program: Community, Culture and Recreation (CCR) component which covers 83% of the cost, and the city must pay the difference. We anticipated a larger share of our share over a year ago, at $ 650,000, and it will go towards renovating the locker rooms and ball fields.
The second project is the Palmerston Sewage Treatment Plant Clarifier, which is repair work and estimated to cost the entire project around $ 3 million. Of this, $ 2.5 million will be borrowed and the remaining $ 400,000 will come from wastewater life cycle capital reserves.
Third, the 12th line crusher and paving project has been underway for two years.
“The culvert was replaced and urgent road repairs were made. The final step in this project is to complete the milling and paving of the section of the road that is being replaced, ”said Duff.
“The estimated cost of the 12th line for the work to be done in 2022 is $ 650,000. There is $ 150,000 in the budget amounts already approved and it is recommended that the remaining $ 500,000 be held by borrowing over 10 years. ”
Finally, the repairs to the water line to be carried out at the Royal Terrace retirement home on White Road have been a costly project.
Although this is a joint project with Wellington County, the total estimated cost of this project is $ 3,700,000 with Wellington County’s share estimated at $ 1,745,000 and City’s share. from Minto to $ 1,955,000.
The cost of the city would be funded by $ 445,000 from development charges, with the remaining $ 1.5 million to be borrowed. The road works of $ 575,000 would be guaranteed over 10 years and the water and wastewater components of $ 580,000 and $ 355,000 would be guaranteed over a period of 20 years.
Com. David Anderson was a little skeptical about borrowing more money and asked about the effects of long-term borrowing on interest rates for the retirement home project.
“If we borrow more money and our interest rates go up, do they agree that interest rates go up too? ”
Duff explained that the city is income neutral, which means interest rates are fixed for 30 years.
“What happens is we make semi-annual payments, so when the payment is due, they send us the money, principal and interest: $ 25,000 every six months plus interest. We have no profit or loss, ”said Duff.
When asked by how much interest rates are expected to increase for 2022, Duff explains that rates are expected to be higher regardless of the amount of borrowing and budget changes over the year.
He noted that if the council locks in the interest rate for long-term loans, the rates will not change, but it should do more reports to determine exactly how much taxes will increase for Minto residents in 2022.
“It won’t affect the 2021 tax hike for Minto residents, but we need to consider the cost of funding in the 2022 budget,” he explains.
“Annual reimbursements are estimated at approximately $ 120,000 for tax-funded road projects, $ 185,000 for wastewater treatment projects and $ 23,000 for water-related projects. We have not yet obtained the conditions.