While thankful for recent infrastructure grants from the federal and provincial governments, Erin officials will have to borrow almost $290,000 to cover the town’s share of the total project costs.
Last month, the town received word it would receive almost $2.7-million in funding to be put towards four major projects with a total combined cost of just over $4-million.
The problem is that left almost $1.34-million as the town’s share for the work, none of which was included in the 2009 budget.
So on July 14, Finance Director Sharon Marshall presented several revisions to the town’s capital budget schedule to help cover its portion. Her report included recommendations for the following projects:
– Deer Pit stormwater management work, at a total cost of $1.21-million, with $806,666 coming from an Infrastructure Stimulus Fund (ISF) grant and $403,334 from the hydro proceeds reserves;
– expansion of the arena at Centre 2000 (including larger dressing rooms and more storage) at a total cost of $993,000, with $662,166 from a Recreational Infrastructure Canada (RInC) grant and $331,084 from the hydro proceeds reserves;
– reconstruction of Sideroad 5, at a total cost of $950,000, with $633,334 from an ISF grant and $316,666 from 2010 federal gas tax payments; and
– rehabilitation of Hillsburgh streets, at a total cost of $860,000, with $573,334 from an ISF grant and $286,666 from a new loan.
“Although I have considered funding the town’s share of the Hillsburgh streets construction with existing roads capital reserves, I recommend we do not deplete reserves any further in 2009,” Marshall told council.
She explained covering the work with reserves would leave a balance of less than $100,000, which could prevent the completion of any other unforeseen roads projects this year.
Instead, Marshall suggested the township apply for a loan under the new municipal infrastructure loan program offered by the Canada Mortgage and Housing Corporation (CMHC).
The town will be seeking a 10 to 15 year deal, with an interest rate between 3.75% and 4.25% – to be finalized upon signing the loan. If not approved under the CMHC program, Marshall will submit an application under Infrastructure Ontario’s loan program, though its rate is usually 0.25% higher than CMHC’s.
Mayor Rod Finnie said he is glad to see the town will be borrowing as little as possible. Council voted unanimously to proceed with the loan application, to add the additional infrastructure costs to the 2009 capital budget and fund them as per Marshall’s suggestions, and to proceed with tenders as soon as possible.
But several councillors wondered if using the 2010 gas tax funds for the Sideroad 5 reconstruction would create a cash flow problem, because those funds will not arrive until next June and November.
That the town has received from the federal and provincial governments neither the promised 25% advance on the grants nor the necessary funding agreements, could exacerbate the municipality’s cash flow shortage. But in a really tight situation, Marshall said the town could use its emergency borrowing bylaw as a temporary stopgap.
Finnie said perhaps a letter to the two levels of government asking where the grant money is would be helpful. But not wanting to come across as “nasty” or annoying, council and staff agreed to give the governments another week before sending the letter.
Hydro proceeds reserves currently sit at $865,235. After the Deer Pit and arena expansion projects, that balance will be $130,817.
