Part of the payment for North Bay’s proposed community centre includes paying off multiple decades of “special debt”.
During Wednesday’s capital budget deliberations, a funding breakdown on the community centre was provided to the General Government Committee by city staff.
About $5 million has already been spent on the project (mainly planning and consultations) between 2019 and 2020 before roughly $36 million in potential construction costs get added to the books in 2021 and 2022.
Just over $31.6-million of that would be financed through a special debt that city council still has to approve.
Under provincial guidelines, municipalities can take on a debt representing up to 25 percent of their revenues. Council has an internal policy to cap that debt limit at 15 percent, which would represent about $18-million.
Should the community centre project be granted as a special debt by council, the designation would allow it to fall outside of the city’s normal operating debt, which currently sits at around $8.5 million.
Margaret Karpenko, the city’s Chief Financial Officer, says council has maintained a “prudent debt structure” which has allowed it to fall far below the provincial limits set on accruing debt.
By designating the community centre’s debt as a special debt, it would also not affect the city’s credit rating to earn any of the long-term loans needed to fund the project. Because of this, Karpenko says the city could theoretically take on additional debt for more capital projects in addition to the community centre if they chose to.
Karpenko explained to the committee that projections on operations of the new arena would cause a levy increase of $100,000 to arena services.
This was based on applying current operating costs for the West Ferris Arena to 2023 while considering inflation. Karpenko says the costs are comparable because a twin-pad is cheaper to operate than a single pad.
The budget for arena services rose by almost $234,000 in 2020 from 2019, with an increase of $72,000 being proposed for 2021.
In addition to the special debt, the proposed financing of the arena includes a combined $9-million from special dividends and Federal Gas Tax money.
In total, staff is projecting a $41-million tab to build the project, not including interest payments on loans.
Talks on what items will be voted on by council will be made on Thursday as the 2021 budget is set to be finalized next week.
