Councillors here have approved a move to seek a 20 year, $2.1 million debenture from Wellington County to cover the costs of the Hillsburgh Fire Hall rebuild.
Director of finance Sharon Marshall’s report to council on Jan. 10 recommended accepting the construction cost summary report as information and council accept the treasurer’s recommendation to participate in the coming issue of a county debenture.
The move would authorize the county to negotiate a loan on behalf of the town for $2.1 million with a repayment term of 20 years.
The net cost of paid-to-date invoices is $383,951 – including pre-construction costs from 2010 of $36,712.
Marshall noted the invoices paid thus far include work completed only as of Oct. 31.
She said at this point one change order was paid in the amount of $18,201 and $24,346 of the $110,000 contingency fund.
“We’re well under budget at this point.”
She believes the numbers over the next few months will provide more information to council and she would continue to provide monthly summaries throughout the project.
As the council’s endorsement to seek a debenture, “what I am in essence suggesting, is to term out the construction loan for the Hillsburgh Fire Hall, which council approved last summer.”
Marshall explained Wellington County is preparing a debenture issue March 1.
“As we have done twice in the past, the town can piggyback our new Hillsburgh Fire Hall construction debt of $2.1 million onto the county issue.
Marshall added she and the town’s financial analyst have considered other options.
She had not expected the county to offer debentures early and hoped it would happen a little later in the spring when there would be a clearer picture of the costs.
“But it is being offered now and the rate is good – we have historically low interest rates”
She said a loan term of 20 years is justifiable considering the expected useful life of the new fire hall is 40 years.
“I think to wait to secure a long term loan, you are taking a bit of a risk. I’m not sure the risk is great, but the longer you wait to lock in a rate, the more the chance the rates will creep up.”
She said $2.1 million would cover construction expenses – not office equipment and furnishings.
Marshall estimated annual debt repayments at 3.6% over the 20 year period would be $148,200.
She said the town will see its annual debt servicing costs reduced in the coming years with the maturity of two of its main loans – this May’s final payment for the tennis court ($17,952 annually) and the 2015 final payment for the Centre 2000 loan ($134,904 annually).
She said one way to justify a 20-year period is knowing by 2016 the town’s debt charges will be reduced by roughly $152,000. Council approved the recommendations and planned to proceed with a bylaw at council on Jan. 24.
