CENTRE WELLINGTON – The township is looking to borrow up to $27 million to fund four large capital projects.
Following staff recommendations, Centre Wellington council directed staff to formalize a debt issuance in the form of a fixed rate borrowing with an interest rate swap of up to $27.7 million in 2025 at a meeting Monday evening.
This will fund new well area investigations, the new corporate operations facility, phase two of the township's water supply strategy and land acquisitions related to expanding the Fergus Sportsplex.
The township currently has just over $16 million in debt, including $4 million for the expanded Sportsplex.
According to a staff report, while the township has kept debt to a minimum in recent years due to "strong cash positions," they are recommending it now considering that "significant" capital works are now largely complete and "significant" resources are anticipated to complete the 2025 capital program.
Managing director of corporate services and township treasurer Adam McNabb said they're investigating using a fixed-rate borrowing system with an interest-rate swap to simplify the debt issue because it's provided at a lower cost of borrowing compared to traditional methods while providing faster access to cash and an application process that is "potentially less administratively burdensome."
Other options available include a debenture partnership through the County of Wellington and borrowing by paying off a debt or loan over time through pre-determined installments from the Ontario Infrastructure and Lands Corporation (OILC), which have been used in the past.
Coun. Bronwynne Wilton asked what the township's level of risk is if they take on this debt, especially given provincial "chatter" about potentially reducing development charges and staff plans to pay 86 per cent of the debt off through development charges.
McNabb said there would certainly be a risk if the province did something "drastic" like removing development charges altogether but even in that case, the township currently has "fairly stable" development charges and there would be opportunities to "pump the breaks" within their long-term capital forecast if required.
"On balance, we're fairly risk averse as a municipality and certainly as it comes to debt ... I think we're in a fairly good stead," said McNabb.
He said staff will report back with an approval bylaw and specifics once they're determined.
Isabel Buckmaster is the Local Journalism Initiative reporter for GuelphToday. LJI is a federally-funded program
