City of Greater Sudbury to borrow $205 million for large projects

Ed Stankiewicz is the city's executive director of finance, assets and fleet. Supplied photo jpg, SU

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The city took a big leap forward Tuesday on the large projects.

The finance committee, which constitutes all of council, voted to secure more than $200 million in debt “in order to take advantage of the low-interest environment to finance council-approved capital projects,” the resolution stated.

Ed Stankiewicz, the city’s executive director of finance, assets and fleet, said conditions are favourable for borrowing $205 million to finance several city projects and developments, some of which are in various stages of planning.

“Financing these right now, in advance of needing the money, would make sure we have no interest rate risk going forward,” he told council.

Stankiewicz said right now, the city could borrow for infrastructure projects at 2.63 per cent interest. To put the money into a holding account, it would only cost $30,000 annually for every $100 million borrowed (so about $60,000 per year).

Deb McIntosh introduced a motion at Monday’s meeting of the operations committee to encourage the use of green technologies in construction. supplied photo

 

“That’s quite a big drop from when the report was prepared, because we were looking at $460,000 per year to finance,” Ward 9 Coun. Deb McIntosh noted.

There are several developments the money could be used to finance, including a new arena; The Junction projects; a conference and convention centre; as well as several projects that could become part of next year’s budget deliberations, including the remainder of the Lorne Street revitalization, EMS headquarters and the Valley East twin pad. The money could be used for any of these items, Stankiewicz said.

There is some urgency, he noted, since markets are changeable and fluctuate according to several external and uncontrollable conditions.

Ward 11 Coun. Bill Leduc actually said he would like to see the city borrow more money, as much as $350 million, in order to complete some other work and to purchase some road maintenance equipment. He proposed an amendment to the resolution, but it was defeated.

Ward 1 Coun. Mark Signoretti is defending the GSDC and says the organization should be left alone to do its work. supplied photo

 

While he appreciates that interest rates are currently low, Ward 1 Coun. Mark Signoretti said he is concerned they could fall even further.

“While there is a chance interest rates may go lower, these are pretty significantly low rates right now at 2.63 per cent, which Infrastructure Ontario is providing us,” Stankiewicz noted.

Ward 5 Coun. Robert Kirwan agreed with the city’s top financial officer.

“This is why we have a chief financial officer and a team, to come to us with strategies for moving our projects forward,” Kirwan said, noting he felt Stankiewicz’s proposal was “significant” and could help to transform the city.

 

 

In all his years,

Robert Kirwan jpg, SU

said he has never seen rates this low before.

“I don’t think there’s much risk they’re going to go much lower, but I can see them going higher,” he said. “This is the ultimate form of risk management moving forward with the projects we’ve already got lined up, so thank you and I hope that we support it as presented.”

Ward 4 Coun. Geoff McCausland proposed an idea that would see the former hospital on Paris Street transformed into a conference and performing arts centre (the city recently upgraded the parking facility beside the building). He also said he believes it is unwise to continue investing so heavily in the Kingsway Entertainment District, especially while appeals are underway. The money could be used to finance several other projects.

“Instead of building a $90-million arena and event centre, based on a plan that is quite precarious, what if we looked at Plan B?” he asked.

That plan includes money for parks and trails, $26 million for a twin pad, $4 million for a therapeutic leisure pool in Azilda and $10 million for upgrades to the existing arena that would allow “another decade or two” of operation, McCausland posited.

“Imagine what it would look like if we invested $15 million into our city’s trails and parks,” he wondered. “On top of all of those city-building wants, we would still have $25 million to put toward our needs, which would cover more than half of the projected 2020 growth and infrastructure budget, to help us get ahead of our infrastructure deficit.”

Ward 2 Coun. Michael Vagnini cautioned his colleagues against moving forward with accruing debt before the city has a firm understanding of how it will be impacted by cuts to provincial transfer payments.

The resolution was easily passed, with only Signoretti and Vagnini voting against it. Ward 3 Coun. Gerry Montpellier and Ward 12 Coun. Joscelyne Landry-Altmann were both absent from Tuesday’s finance meeting.

mkkeown@postmedia.com

Twitter: @marykkeown

705 674 5271 ext. 505235

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Is this a prudent decision by city councillors? Let us know what you think at sud.letters@sunmedia.ca

 

 

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