Although it was not exactly unanimous, Wellington North council is going ahead with a $2-million debenture for the Mount Forest District Sports Complex.
Following a brief gathering of the finance committee just prior to the meeting, council was presented with the recommendation to go with option 3 – a debenture over 10 years and a 15 year amortization.
Annual payments would be $186,051, with total payments over a 10 year period of $1,860,510. The total interest paid at 4.6% over 10 years would be $638,151 and at the end of the 10 year term, a lump sum payment of $822,643 would need to be either paid out or refinanced.
However as the recommendation came to council, councillor Dan Yake voiced concern about the process. He said the last time the issue was discussed, he had asked for a recommendation from the finance committee – and to have the time to ask further questions, if needed, before the recommendation came to council.
But as presented, he said it gave councillors little time to think about it prior to making a decision.
Yake questioned how the decision will affect the municipality financially over the next decade.
Mayor Mike Broomhead said the delay in the recommendation resulted from the chair of the finance committee, Ross Chaulk, being out of province and only arriving back the night before council. He stressed the debenture is not for an additional $2-million – but for finances within the proposed budget of the Sports complex.
The original plan was to finance $5-million of the project and to finance some of the project internally. At that time interest rates were about 6.5% to 7%. Now rates are in the range of 4.6 to 5%.
That change could potentially save Wellington North over $695,000 in interest payments while keeping the project on budget, Broomhead said.
Yake still wanted to know what financial position the decision will leave the township “Will we still be able to get other needed projects done?”
Broomhead contended that a debenture at a lower interest rates should put Wellington North in a better position.
When asked if there is really a need to rush the decision, Broomhead said there is not.
However, if the request was to be made, he believed it would be better to have the debenture locked in at the current low rate than to wait and risk interest rates going up.
Although council approved the move, Yake was opposed.
Later in the meeting, he said his main concern is the process. He had asked for a recommendation prior to that night’s council meeting – “not as a verbal report two minutes before we were to vote on it. A verbal report was not what I wanted,” he said.
Broomhead maintained his belief that the municipality would generate substantial savings by locking into a debenture at a lower rate.