SBP will borrow for projects
South Bruce Peninsula council learned two major projects – with a price tag of over $520,000 for this year’s portion of the work – are completely unfunded.
Several council members expressed surprise as they learned at a council meeting in Wiarton, Sept. 5, that the funds – intended to be covered by this year’s municipal tax levy – were never collected.
As a result, the Sauble town square and Colpoy’s Bay dock repairs – at a total budgeted cost over two years of $900,000 for the former and $250,000 for the latter – will now be funded through debenture, amortized over 10 years.
Annette Robson, deputy manager of financial services for the town, also reported a third item from the town’s “wish list” – GPS tracking software – remained unfunded at a cost of $35,000. This item will be considered in the town’s 2018 budget deliberations.
Robson found the shortfall in tax-supported capital projects when she was updating the town’s reserve and reserve fund spreadsheets.
Staff also found about $256,000 mistakenly earmarked to buy new vehicles for the public works department with gas tax funds.
Robson told council these purchases – which have already been made – became ineligible under the Gas Tax Agreement in 2014.
There was some confusion during council’s discussion of the missing funds, with Councillor Ana Vukovic asking, “Where did it go?”
“It was never there in the first place,” Councillor Craig Gammie (accurately) replied.
Robson confirmed the money was not transferred from the operating budget to the capital reserve.
Coun. Vukovic said that’s fine, but it’s there somewhere.
“It was collected from the taxpayers,” Gammie said.
“No. It didn’t make it that far,” Robson said.
In an interview after the council meeting, Mayor Jackson said council thought they had about half the costs budgeted for 2017 for the two projects.
“It seems that, from what we’ve gathered, it was one council meeting, a budget meeting, and all of those extra projects that we agreed to do, somehow didn’t make it to the books and so they were never levied.”
Jackson called the Sept. 5 decision to debenture the projects “very standard” for large projects.
“We did it with the arena, we did it with the reconstruction or redesign of Bluewater Park, we’ve done it for many different projects. That’s what happens when towns want to take on big projects, they almost always have to debenture them. We were hoping to take money from two separate years in the budgets, but it didn’t obviously work out that way,” she said.
Several options to address the Sauble town square project were presented to council, including cancelling the project.
“I’ve recommended that it remain unfunded and be debentured at the end of the project over 10 years,” Robson said. This would mean once the project was complete next year – council would apply for a loan from Infrastructure Ontario, “our cheapest avenue to funding” she said in a telephone interview, Sept. 6.
The loan would be at a fixed rate of about 2.7 or 2.9 per cent interest, she said, depending on the rates at the time council applies. A bylaw will have to be passed to go to debenture, she added.
Robson’s revelations led to uncharacteristically subdued voices as council members struggled to understand how this happened and what to do about it.
Councillors Gammie and Vukovic – both of whom have not been in support of the Sauble town square project as proposed – initially seemed incredulous that the money was not there.
“We don’t have the money? We should not do this project then,” Gammie said, suggesting council defer both initiatives until next year.
Deputy Mayor Jay Kirkland said the town still hadn’t considered or applied for any provincial or federal grants for the project.
“I’m still in favour of moving forward on a 10-year debenture. We’ve done it on a lot of projects in the municipality,” he said.
Mayor Jackson said she had a verbal commitment from Big Island Quarries in Wiarton to donate the stone required for the Sauble town square project.
Councillor Matt Jackson also wanted to move forward and to direct staff to look into grant and sponsorship funding.
“I’ll go hit the pavement if I have to,” Jackson said, adding, “This project’s still very much doable.”
Coun. Jackson asked Andrew Sprunt, manager of public works for the town, if there were less expensive ways of completing the Colpoy’s Bay pier repairs.
Sprunt said no money had been spent to date on the project, but that it could still move forward in the winter and grants could be sought to fund the work.
Robson’s report to council said staff had already kiboshed the pier work for this year, to be reconsidered in the 2018 budget deliberations, but Mayor Jackson said she did not want to tell the residents that the project had been cancelled, preferring instead to debenture that work also, once it is complete.
Coun. Gammie said, in effect, the taxpayers were told they were being levied a certain amount but if that amount had been “put in there properly” there would have been a “huge tax increase.”
“And now we’re going to try to sweep it under the rug by saying, ‘oh, we’ll just go out and borrow the money.’”
Coun. Gammie called the decision to debenture the projects “offensive to the taxpayers,” especially without consulting them before effectively increasing their taxes another eight per cent.
Coun. Gammie suggested council apologize to the taxpayers if they are unable to raise the full amount through sponsorship and other funding.
“In no way am I trying to sweep anything under the carpet. We’re trying to deal with it,” Deputy Mayor Kirkland said. “We’re trying to be totally up front with the public.”
Gammie’s suggestion to look at all other sources, “anything but debentures” was defeated, with only Coun. Vukovic in support.
The town’s last tax hike was 2.96 per cent.
“This would have been considerably higher,” had the tax levy actually covered all projects as planned, Robson said in an interview. South Bruce Peninsula residents would have been hit with roughly 7.5 per cent more – for a total municipal tax levy closer to 11 per cent in 2017, she said.