Administration updates town council on debt matters for two projects

Amherstburg Town Hall.

Town council and the public were recently updated on debt and costs related to the new fire hall and water treatment plant construction work.

Deputy CAO/director of development services Melissa Osborne went over the borrowing bylaw and delegation of authority bylaw. Osborne said it was the next step in executing the debenture association with the new fire hall and the Amherstburg water treatment plant.

“The fire hall has an approved capital budget of $11.8 million. The approved debt associated with the project that council has approved is $11.4 million and, to date, there have been expenditures of just over $6.6 million,” said Osborne.

The reservoir project at the water plant, Osborne said the total project budget is $16.4 million with an approved debt of up to $5.9 million. Expenditures to date are $12.9 million.

“The town’s annual repayment is essentially if you think of it in terms if you went to the bank to find out what kind of mortgage you could obtain, it’s essentially what it is for the town,” she said.

Municipalities are allowed up to 25 per cent annually of their net revenues based on the 2026 annual repayment limit of $54.6 million.

“For the town, our 25 per cent is $13.6 million,” said Osborne.

Currently, the town pays $3.1 million annually, which equates to 5.7 per cent of the allowable amount, she added. This leaves an allowable $10.5 million annually that could be paid on a loan should the town maximize its 25 per cent, she said.

Osborne said the town has increased its operating budget in order to service increased anticipated debt. If projects are separated, the town is short $61,000 to fund the fire hall project with the water project to be reviewed and water user rates or development charges could be used for the latter.

The annual repayment limit would be $4.2 million to service the new debt, or 7.7 per cent of the allowable 25 per cent.

“While that would be the amount starting in 2027, some of the existing debt that makes up the $23.7 million is going to be reduced by $2.8 million by 2032 and by an additional $1.69 million by 2035,” she said. “So your 7.7 per cent in the first five years will be reduced substantially.”

According to Osborne, the issuance of debt this time around “is reasonable and financially responsible.” She said based on a BMA study completed for 126 municipalities in Ontario, of which 31 are comparable to Amherstburg, “the average full debt per capita is $655. Amherstburg does indeed exceed that at $914.”

Osborne added “the majority of why we’re over on our total debt is because we have to service and maintain our water and wastewater services.” She said “our reserves are also in good standing.”

The town has increased its accumulated surplus from 2017-24 by $92 million, the debt was reduced $14.6 million, total cash increased by $52.8 million, total financial assets increased $60.9 million and net financial assets transitioned to where total financial assets exceed financial liabilities by $9.2 million, Osborne’s presentation maintained.

Financial risk factors have been reduced to low, she added.

Osborne said administration believed town council needed a full understanding of the town’s financial situation, which is why the presentation was made at the May 11 meeting.

Councillor Linden Crain called it “a very helpful report and positive report.”“Online, we see a lot of misinformation, I have lately, a lot of it AI driven,” said Crain. “It’s very helpful to helpful to see the stats on screen. I think this council and past councils have been making great strides.”

Crain wanted to know how Amherstburg compared to other municipalities regarding ARL’s, with Osborne stating the statistics she had were from the BMA study and she can follow up with the rest.

Councillor Diane Pouget said the financial statistics were from 2024 and wondered by 2025 stats weren’t used. Osborne said the information was the most recent they have, with 2025 FIR’s being finalized.

“Our financial situation has not degraded in any way to where it would be alarming in any way or those stats would be different,” said Osborne.

Pouget said she didn’t see figures for the expansion of the water treatment plant, something she estimated at $30-$35 million. The reservoir was one component of an overall project, with the other components to come before town council in the future.

“Those costs are not approved by council so they are not reflected in here,” said Osborne.

Pouget asked about possible fire hall overruns, with Osborne stating the approved budget is $11.8 million with no cost overruns known of to this point.

“Do we anticipate any further overruns for the fire hall?” asked Pouget.

“At this point, I’m not aware of any,” responded Osborne.

Deputy Mayor Chris Gibb wanted clarification on fire hall costs with Osborne stating they are only allowed to spend $11.8 million. Expenditures to date are $6.6 million.

While there was a substantial grant for the water plant, for the fire hall the majority of the funding to build it is debt issuance.

“One of the financial strategies for these projects, given the positive cash position that the community has been in, was to leverage our existing reserves rather than issue what’s called a construction load debt. Rather than issuing debt from the very start of the project and incurring interest on those payments until you finalize the project, we have actually borrowed in both cases from existing reserves, paid the bills of the $6.6 million and the $12.9 million and when you issue the debt, the funding that was used from those reserves so we didn’t have to incur interest any sooner than necessary was replenished back into those reserves so they are whole,” said Osborne. “Most of them are legislated ones that you can borrow from but you can’t permanently fund from.”

Gibb said “we have borrowed from ourselves $6.6 million and when we issue the debt, we will pay ourselves back in reserves and the rest goes to the contractor. We are not overbudget.”

Osborne said the town is able to borrow from themselves and not pay interest from the start of the project. 

“You’ve actually saved money doing it this way,” she said.

Administration updates town council on debt matters for two projects

By Ron Giofu