Community Centre financing won't affect Cobourg tax bills, CAO says
Blogs and rumours are spreading the misinformation that paying off the Cobourg Community Centre will raise tax rates by a percentage or two.
The news that it won't comes from the town's chief administrative officer Stephen Peacock. The final paying-off of the centre will be accomplished with money the Town of Cobourg already has or can arrange for, with no need for a tax increase.
To understand how the town will pull that off, Peacock said in a recent interview, you have to look back a couple of years.
Council agreed to a funding formula in 2009, before the centre was every built, of $18.2 million from the Federal and provincial governments, $6.4 million from development charges and $2.7 million from fundraising.
The building came in on-budget, Peacock said, but the fundraising fell short.
Fundraising is still going on and will continue, but a reasonable amount of time has passed since the centre opened in 2011.
"We decided we would look at the final financing of the project, based on the original fundraising guidelines — there's nothing new," Peacock said.
• Some $1.5 million will be taken from Holdco reserves, "which is the reserve from revenues generated from the public utilities, which we own. That will be paid back as fundraising continues," the CAO said.
• Of the $6.4-million that was to come from development charges, $2.4 million will be automatically paid from that reserve fund. The $4-million remainder will come from the reserve as well, but by way of a 20-year debenture that will be paid back at an annual cost of $275,000.
Peacock took the opportunity to explain how development charges work: you define an upcoming project well into the future, and determine what portion of the project is prompted by development. In the case of the community centre, it was determined that a $6.4-million share would be triggered by new development in the town.
"Because of that, that money would be taken from development charges," Peacock said.
"In no way would that impact the tax base. New people coming into town would pay it when they purchased a house."
Development charges are triggered right away, though the entire amount needed may not come into town coffers for some time. If you want to build a sewage plant to serve 2,000 homes, for instance, you have to build the plant to be ready as soon as the first home needs to flush a toilet.
"The legislation understands that, and understands that collection of funds will be over the life of the infrastructure you are building. Therefore, there's a very clear mechanism in the provincial act that calculates the financing costs as well as the capital costs into the price," Peacock said.
"What that means with this $4 million we are taking in a debenture, the full cost of the capital as well as the financing — the debenturing — are fully collected by the development charges.
"That will fully come out of the development charges and not, in any way, come out of the taxes for that year. It's fully self-funded from development charges, not a tax matter. Development reserves are cash we already have, and the debenture is financing we already have in place. It in no way touches the tax bill," he said.
"The good news is, it's an extremely well-received facility. We have accolades from all over. When teams come, they think, 'What a privilege for the community to have such a good facility.'
"The seniors' program has blossomed. We started with just under 400 members, and we have over 800 now — and expect it to keep going up."
The multi-purpose room layout has been a bonus, allowing for flexibility and growth of the programs. And the seniors' expo they had proved to be one of the best-attended ones in the province.
"We are really, really happy with the opportunities that come up because of the community centre — major teams, major performances, the hospital gala," Peacock listed.
"They've just announced a professional lacrosse game there, and there are all sorts of things we are looking at for 2013."