Woolwich considers borrowing for road maintenance work

Councillors split on staff direction to acquire debt to finance road works

Falling behind on road and bridge repairs, the township is looking at borrowing money for such projects, something it’s typically reserved for more tangible assets such as the Woolwich Memorial Centre. While staff sees it as a sound financial option, councillors had some concerns Tuesday night as they discussed the proposed capital budget for 2020.

The township is looking to spend $10.4 million on engineering projects, part of a $15.5-million capital budget. On tap for 2020 are bridge costs of $1.5 million and paving projects valued at $2.7 million, a list that includes stretches of Chilligo, Spitzig, Maryhill and Middlebrook roads, along with Sideroad 16.

Other expenses include piggybacking on Region of Waterloo reconstruction projects on Hawkesville Road, a cost to Woolwich of $500,000, and Kressler Road ($443,000). Lining sanitary sewers will take another $1 million.

While some of the projects can be funded through reserve funds and development charges, much of the road and bridge work is funded directly from the tax levy, making debt financing a good alternative, suggested director of infrastructure services Jared Puppe.

Putting off some of the work slated for this year would save money, but would only add costs to future years, compounding the financial concerns down the road, he added.

“There are a number of pressures and stresses on the capital side for Woolwich.”

Agreeing the work needs to be done to tackle the township’s infrastructure deficit, Coun. Patrick Merlihan argued administrators should instead find savings elsewhere in the budget to pay for “needs versus wants.”

“We don’t like debt,” he said. “Your roof needs fixing, so fix the roof, but do it within your budget. If your roof leaks, you fix it. You don’t go on a Disney vacation this year.”

Coun. Murray Martin also had reservations about borrowing to pay for road work, pointing to an ongoing deficit in infrastructure projects.

“If you have a debenture this year ... what about next year? And what about the year after?”

The discussion prompted Coun. Scott McMillan to suggest the township look at increasing its longstanding special infrastructure levy, which this year is expected to be 1.5 per cent.

He was also open to the idea of borrowing, suggesting that if the debt carrying

costs, which would be $50,000 to $100,000 over ten years, are lower than the future cost of redoing the road after it’s left to deteriorate, then it’s good debt.

He argued there’s some urgency to getting the infrastructure file in order given that years of growth have not paid for itself, leaving even greater future costs.

“There are different ways to look at debt,” agreed Mayor Sandy Shantz, noting that future generations will pay for the work, but will have use of the assets.

Director of finance Richard Petherick said the debt option is being considered in part because the township has two such debentures set to expire in 2021 and 2022, freeing up payments that would be almost equal to the $900,000 in borrowing being proposed for road paving jobs.

“We’ve got needs all over the place,” he said, noting debt financing would be a way to keep the projects on track, otherwise “something is going to give.”

“We’ve got more needs than we have resources,” Martin pointed out.

Tuesday’s meeting was the first of four meetings council has set aside to deliberate the 2020 budget. Talks resume tonight (Thursday).