The city has more than $30 million in the bank, has no need for long-term debentures to finance its major projects and has a debt per capita rate that is much better than expected.
That rosy forecast was given to city councillors this week as part of a three-hour meeting in which elected representatives received updates on its major capital plan and its corporate plan.
“It is very good news,” said city treasurer Jim Lang of the city’s fiscal position. “Going back four years ago, if we were looking at the major capital plan, that identified the need for using debentures to finance some of the projects. Currently, the plan indicates no need for long-term debentures.”
Lang said the municipality has just one outstanding debenture that will be paid off by 2022. “(That) puts the city in very good standing compared to other municipalities of a similar size.”
This week’s report on the city’s major capital plan provided an overview of the various capital projects, status updates, timelines and budget numbers.
The report was meant to provide an update to council on current and future project activities identified in the city’s 2018 capital budget, Jas Rattigan, the city’s manager of accounting services, told councillors, noting the plan was last reviewed in July of 2017 in conjunction with the city’s 2018 budget deliberations.
Rattigan said council established a maximum debt level of $1,000 per capita. According to the report, in 2017, the debt per capita was $313. It’s projected to be $431 in 2018, before falling to $278 in 2019 and dropping to just $125 in 2020.
Coun. Tim Lauer said those numbers were “impressive.”
“It’s really good news,” said Lauer. The Ward 4 councillor added: “We’ve identified some capital expenditures down the road and we’ve sort of taken our best guess at revenues. In that equation, was the potential sale of (the distribution component of Orillia Power Corporation) contemplated?”
Lang said the potential sale – turned down last week by the Ontario Energy Board – is not a factor in the forecast. However, he noted yearly dividends from Orillia Power are factored into the plan.
Lauer wanted the public to know proceeds from the potential sale were not being used to fund capital projects – something many in the community have speculated about. “The money attached to the potential deal was going to be put into a legacy fund and was not factored into any future considerations, correct?” he asked Lang. The treasurer agreed.
The only lingering cloud on the otherwise sunny fiscal forecast is the status of the city’s reserve funds. At the end of 2017, the city’s reserve funds had a total negative balance of $50.8 million. That will be reduced to $25.8 million by 2022.
“Although the major capital plan demonstrates positive bank balances as projected for future periods, it’s important to understand the overall reserve balance will remain in a negative position although (it will be) reduced significantly over the next five years,” said Rattigan.
The city has approximately $30.5 million in cash and short-term investments available to fund ongoing capital projects and operating expenditures. It also has a $10-million line of credit.
At this week’s meeting, councillors, at staff’s request, voted to increase that line of credit to $15 million to be used only if necessary.
Council also decided to have a future special meeting to re-evaluate its priorities. That meeting was spurred by concerns Lauer raised. The Ward 4 councillor said he is not happy that council will not participate in customary pre-budget deliberations this year because it’s an election year.
“I believe we are still the stewards of the ship right up until we’re done in December,” said Lauer. “I realize we can’t commit anything to the next council and they will make their own decision, but I still think we should be offered the ability to direct and check the direction” of major projects.
Coun. Ted Emond agreed, noting several projects on the city’s radar, such as the redevelopment of Laclie Street and a possible makeover of the main street, are not included in the city’s long-term planning document.
CAO Gayle Jackson said council could juggle the priorities, but reminded councillors that, ultimately, future direction would be up to the next council.
“I would just ask members of council to turn their minds to what is the true impact and effect of where they want to go,” she said. “Truly, it will be next term of council that will dictate the plan of action for our community.”
Despite that, council will meet to discuss the possibility of adding and or changing the priority level of various projects in May or June.
Watch for a story about the status of the new recreation centre and the future of the Brian Orser Arena later today!
