Financing the Cassellholme redevelopment through Infrastructure Ontario is the focus of an upcoming meeting with member municipalities.
Last week, Cassellholme announced they’re ready to proceed to construction with the cost of the redevelopment nearly $122-million.
Board Chair Chris Mayne says about a year ago they went to 27 commercial lenders about financing, and there really wasn’t any level of comfort in financing a long-term care facility.
“At this point, the only funder we’re left with is Infrastructure Ontario,” he says. “One of their most significant requirements is that municipalities have to be prepared to guarantee the full cost of the project [because it’s deemed to be a municipal project], the full $121-million, not just the share they’re borrowing for themselves, which is about half that amount.”
He says that has been a contentious issue with letters from some member municipalities saying they won’t sign.
Mayne says Wednesday evening’s meeting is about clearly showing the benefits to the municipalities.
“[Infrastructure Ontario] has by far the least expensive construction period interest rate, which is about one percent for the first three or four years while we’re building. Then they have the lowest rate available for the 25 years of the actual amortization and that rate is fixed,” he says. “In the opinion of Cassellholme, from everything we can see, it would be significantly more expensive for the funding partners to fund on their own, or through their own banks, rather than sign with Infrastructure Ontario.”
Mayne says the goal over the last six to nine months during this financing discussion has been to reach ‘amicable consensus’ and go with Infrastructure Ontario.
“If we don’t have all nine municipalities committing to the guarantee then the other option to Cassellholme, and this is very contentious as well, is passing on the bill or levying to the municipalities ‘here is the cost, here is your share of the bill’ and then they can arrange the financing on their own,” he says.
Mayne says a lack of consensus has already resulted in the cost of the project increasing, with the bid extended to the end of September.
“The concern is if we let that bid lapse at the end of September then we’re in line for even more significant costs,” he says.
Mayne cites rising interest rates and the availability of contractors that can perform the work on such a large project.
Back in January the City of North Bay rejected the Cassellholme board’s financing strategy.
A release from Cassellholme last week said it’s hoped that construction could begin in late August, with a sod-turning in early September.
