Northumberland County Takes Short Term Pain for Long Term Gain on GPL Debenture
By Cecilia Nasmith/Northumberland 89.7 FM/Today’s Northumberland
Northumberland County council’s Finance and Audit Committee has opted for a shorter-term debenture for the new Golden Plough Lodge-Northumberland County Museum and Archives build, reasoning that payments may be higher for the 20-year term, but there would be overall savings in interest over the original plan for 25 years.
The debenture is for $96.7-million, the original amount intended since the project began, and not the $16.5-million in additional costs that have come up since the project was approved four years ago.
Director of Finance Matthew Nitsch’s report didn’t have any recommendations for that additional amount, though he said that to debenture it as well would not put the county over the provincial ministry’s debt-repayment limits.
At any rate, Nitsch said, the matter should be discussed by the full session of county council on Dec. 18.
Essentially, he saw two options – to take it on as a new debt or dig into reserves, or a combination of the two.
“I look forward to this discussion,” Warden Brian Ostrander said.
“It will be my hope council decides to use reserves for this purpose.”
“My personal preference would be a combination of reserves and debt, maybe selling some assets,” committee chair Lucas Cleveland added.
Looking at terms for the $96.7-million, the province has given the county the option of changing from a 25-year term to a 20-year term. The shorter term will mean slightly higher payments, Nitsch said, “but the benefit is a decrease in total interest over the life of the loan, saving just over $15-million over 20 years.”
Ostrander recalled that the rebuild had been required by the province in the first place, as a result of increased long-term-care standards.
“I’m not blaming anyone – if we are in the long-term-care game, I want to make sure we have a facility that is up to speed, state of the art of the residents who will be using the facility,” he said.
However, recognizing the effects COVID-19 was having on such projects, the province offered special supports to help out some of them – and the Golden Plough Lodge was ineligible because it had started too soon.
Northumberland Chief Administrative Officer Jennifer Moore said they had appealed to the province to reconsider, but never got anywhere. Nitsch estimated that additional funding would have been $2.3-million a year for the rebuild.
“Because Northumberland County was quick to act, ahead of the curve, we are actually penalized for that?” Cleveland asked.
“Because we were so ahead of the game and trying to move forward, this has actually resulted in a negative?”
“That’s what it feels like, yeah,” Moore agreed.
Nitsch added a note of caution following discussions with the project manager.
“He pointed out that the discussions about tariffs between Canada and the US could potentially have an impact on procuring, so there are a lot of unknowns – but there’s the potential for disruptions,” he stated.
“I think every single industry across Canada is concerned about this,” Cleveland agreed.
