MAPLETON – The township is going to the province to help foot the bill for the bloated cost of Mapleton’s water tower upgrade in Drayton.
Originally estimated at $4 million, the township awarded to Burlington-based Landmark Structure Co. a $6.1-million contract in June, based on the increased cost of building materials attributed to the COVID-19 pandemic.
Council approved at its Aug. 10 meeting the pursuit of a $2.9-million loan from Infrastructure Ontario, payable over a 30-year term at a fixed rate.
Artist’s rendering of the tower’s design. (Submitted image)
“The timing for the application is to take advantage of the low interest rates we have right now,” township finance director John Morrison told councillors.
The interest rate on the unsecured debt isn’t known because it fluctuates daily—it’s locked in when the loan is issued.
Providing a ballpark, Morrison said the “spot rate” provided by the province was a little over three per cent when the water tower contract was awarded. Rates are rising; six months ago, it was 2.6%.
According to Morrison, that means in half a year, the cost of interest on a potential loan has increased by around $223,408, putting the cost of financing a loan at around $1.4 million.
Infrastructure Ontario’s process to issue the loan—also known as a debenture—requires a bylaw to be approved by a municipality’s council and signed by the mayor and clerk, confirming intent to submit to the application process.
The application will be reviewed next month by Infrastructure Ontario and township staff will need to return to council with a proposed rate from the province.
Council will have to vote on moving forward with the loan or finding an alternative way to pay for the water tower.
The township is currently borrowing from reserves, using gas tax credits, Ontario Community Infrastructure Fund money and using development charge fees (charged to developers as a form of tax for the increased burden on infrastructure coinciding with increased growth) to pay for the tower.
If council does not move forward with the provincial loan, the township will have to look to increasing development fees, revising the capital plan and searching out other grants, although there are few infrastructure lending options.
