KENILWORTH – Wellington North will continue its current debt payments rather than seek the option of refinancing its debt load for another five years.
On July 8, council approved a recommendation that the municipality continue debt payments and servicing costs for 2020 as outlined in a report prepared by director of finance Adam McNabb and recommended by CAO Mike Givens.
That report states the township “is currently poised to close out 2019 with a debt burden of approximately $2.3 million dollars, and has a hybrid debenture maturing in 2020 which represents the last of three consecutive years with debentures bullet payments required to satisfy debentures entered into to facilitate historic, large capital projects ([Mount Forest and Arthur] arenas, pumping stations, and road reconstruction).”
The report notes the last of three consecutive large payment years is currently scheduled for 2020 with principle payments totaling $1,192,000 required to satisfy the hybrid debenture.
The township could have chosen to exercise a refundable option whereby a portion of the remaining debt could be refinanced for a further five years.
The report outlined the pros and cons of refinancing.
Refinancing pros were:
– reduced in-year debt servicing costs;
– less stress on potential budget levy increase(s) or reserve depletion; and
– lending rates are still favourable.
Refinancing cons were:
– prolonged debt servicing costs;
– less opportunity for future borrowing; and
– extended use of levy dollars for debt servicing rather than community growth initiatives.
Weighing the cash and reserve position of the township, and future debt obligations, the treasurer recommended the township fullfil its debt requirement in full during the 2020 calendar year utilizing a combination of development charges (DC) identified in the 2018 DC background study, and subsequently collected ($383,944), SS reserve funds ($331,256), Capital Infrastructure reserve funds ($429,120), and the Tax Rate Stabilization reserve ($47,680).
Mayor Andy Lennox said it was a good to see the township paying off its debenture, which puts the municipality in a better debt and cash flow situation moving forward.
“Again. I support paying that stuff down when there is the ability to do so,” Lennox said.
