Tuesday, September 11, 2007

City goes $10 million in debt

The City of Timmins is going more than ten million dollars into debt for the first time since the city was declared debt-free in the year 2000.
The city passed a debenture bylaw Monday night to purchase a mortgage-type debenture in the amount of $10.3 million dollars. The city is buying the mortgage from the Ontario Infrastructure Projects Corporation, an Ontario crown agency set up to help municipalities pay for large projects. The money is being used to pay for the new Timmins police building, and the city’s share of the medical office building on Ross Avenue.
The $10.3 million loan has to be paid back over 20 years. The full cost of the payback is $16.6 million, meaning the loan will cost the city $6.3 million.
Mayor Tom Laughren says it’s a good move considering the fact Timmins now has to pay for things it never had to worry about in the 1990’s.
“Well this is probably the first debenture we’ve had since .pre-2000, when we wanted to be debt free,” the mayor told The Times.
Laughren said being debt-free “was a great idea” but he added “nobody had a vision in the early 90s the provincial government and the federal government were going to download so many responsibilities to the municipalities.”
Laughren says the debenture gives the city a favourable interest rate, 5.1 per cent, and allows the city to pay for the projects in a reasonable and timely fashion.
“I think over this term of council you’re going to see a little bit of that only because we’ve been challenged with the police building, we’ve been challenged you know with 20 to 25 million dollars with the water plant, and the medical school which everybody knew at the time was going to be debentured,” he added.
So does this mean the city is going to delve deeper and deeper into debt? Laughren says council will have to be cautious.
“I think we have to be very careful when we look at projects that we don’t we don’t get it in our mind that we’re just going to borrow to pay for these projects,” the mayor said.
“These projects will have to be well planned. I think if you use the police building as an example, there was many partners brought into the police building after the actual original budget presentation.
“There were funding agencies that came on board and that’s a project that comes in under budget, which is very unusual in a government world,” the mayor added.
Laughren says the days of taking the ‘pay-as-you-go’ attitude are not longer reasonable. He says sewer and water plant upgrades in the new few years will demonstrate that. He says if the city is not able to borrow the millions of dollars it needs, “people would be paying for more water, as an example, than they would for taxes.”
“So sometimes we have a little bit of debt,” said the mayor. “I mean we all carry mortgages on our house and we’d all like to be debt-free but it doesn’t always work that way.”

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