Wellington County will lend the local board of health almost $7.2-million over 20 years as part of a new deal to construct new buildings in Guelph and Orangeville.
On Dec. 5 Wellington Dufferin Guelph Public Health (WDGPH) approved a new $22-million financial agreement involving Wellington and Dufferin counties and the City of Guelph.
Board officials say the agreement, divided between the three parties based on population according to the 2011 census, will save taxpayers up to $10 million over the life of the loan.
Chuck Ferguson, communications manager with WDGPH, explained the board hired an outside agency to study the most cost effective way to cover the expected cost, which could reach $24.4 million, with the health unit and province covering anything above the $22 million being borrowed.
“This was obviously the best way,” Ferguson said, adding that borrowing from the three municipalities comes with a much lower interest rate than if the loan was made through the private financial sector.
Wellington will contribute over $7.19 million, while Guelph will provide just under $10.1-million and Dufferin will cover almost $4.71 million.
“It’s full steam ahead” now that the agreements are in place, said Ferguson, noting WDGPH has already held ground breaking ceremonies at the two new locations and two of three the municipal partners have already ratified the financial agreement (Dufferin is expected to do so in January).
Ferguson expects the Guelph building to be completed by January 2014, while the Orangeville facility should be ready a little earlier, in November 2013.
“It’s a significant project … We’re going to debt finance our share,” said Wellington County treasurer Ken DeHart.
He added the county is able to secure a loan at 3.1% interest, which should provide “significant savings” versus the private rate of about 5%.
In a Nov. 20 report to the county’s administration, finance and personnel committee, DeHart said, “The [health unit] would ‘repay’ the loans, but levy the municipalities for the loan payment, creating a direct offset. There would be no actual cash transactions, rather accounting entries.
“The loan arrangement has been set up to protect the municipalities in case of changes to future provincial funding policy.”
In simple terms, DeHart told the Advertiser, the county is “still on the hook” for the $7.2 million.
“We’re not planning on recovering money from the province … we’re just hoping it will come,” he said, noting the province is supposed to pick up 75% of the funding for health unit costs. WDGPH officials do not expect the final price tag for the two buildings to exceed $24.4 million and borrowing more than $22 million would require approval by the board.
The funding agreement also allows for WDGPH to hire an internal project manager to provide assistance to the building project. Reporting to public health’s director of corporate services and finance, this position will work closely with the other two project managers, one from VG Architects and one from Buttcon Limited, the company overseeing construction. The municipalities will have access to regular updates based on reports to the board of health, which are posted publicly before each board meeting as well as through meetings with the municipal treasurers and WDGPH.
“We are on track to come in under budget thanks, in part, to contributions from the Province of Ontario,” Dr. Nicola Mercer, WDGPH’s medical officer of health, said in a press release.
