22 Jul 2024 Council meeting Economy

Nanaimo Operations Centre (Public Works Yard) Funding Options

Motion
That Council direct Staff to proceed with the Nanaimo Operations Centre (Public Works Yard) project with funding of $90.0 million from external borrowing with debt servicing funded by property taxation.
Sources
Agenda itemCity agenda
Staff reportPage 1
Purpose
To provide Council with options to fund the Nanaimo Operations Centre (Public Works Yard) project.
Staff report, page 1
Staff recommendation
That Council direct Staff to proceed with one of the presented funding options for the Nanaimo Operation Centre (Public Works Yard) project.
Staff report, page 1
DocumentsStaff report about Economic Development

Erin Hemmens Yes

I think we've had fairly fulsome discussion on this. I appreciate. Staff desire to see us kind of struggle with this and figure out where we could pull some of the money from. But ultimately, as I said, I'm very hesitant to touch those reserves. And the price differential. Is actually not that great. It's about $30 per household for the average house, so. I actually think this is a better option. It leaves those reserves intact for those things that we don't anticipate like blown pipe, bumpo and road in the hospital losing water. That we always need to have money in the bank for such stuff like that. So I think this is our best option.

Leonard Krog Yes

I get the concern about the comfort level that councilor Thorpe has talked about. But. We don't know where interest rates are going to go and what they're going to be like in ten years. I can remember. When my father in law. Was so proud to brag about getting a five year term and a Canada savings bond at 10%. And I thought it was ridiculous tying it in at such a low rate. Because of the way interest rates were. Well, of course. Within a little while. That 10% made him look like a financial genius. We have a number of projects that we're considering, a number of things that are important. I come back to this. I take the view. And this will raise some consternation with those who've spoken. About the AAP, the AP process for me. Is philosophically, politically. Legally is designed to basically give an option to the voters to say no to a project. That, counsel. By its choice to use an AAP, has already said, look, we really need to do this. We have to do this. It's important. It is one of our fundamental responsibilities. From my perspective. I don't want to wish to be dipping into any of the funds, Gmar or otherwise. Because, quite simply, The first two options mean that those monies won't be available as councilor hemmens. And council Armstrong have pointed out, if we go into an economic downturn, this city is. In an excellent position to carry on with capital construction at a time when, if we are in a recession or an economic downturn. We will have an opportunity with those funds in place to deal with emergencies such as Bowen road. And I'm looking at Mr. Sims. What did that project go from during these high inflationary times 30 40 million to over $50 million for the most basic of things, water. That was necessary to keep our hospital running for heaven's sakes. So I'd rather leave the money in the kitty. And borrow the full 90 million and go for option four.

Questions and answers

Councillor Janice Perrino
Speaker identificationConfident
Yes

asked
item. Perfect. Thanks very much. Councilor Prino. Thank you, your worship. And the questions through you to Ms. Mercer. The language. Is always a little bit difficult to understand completely, and I'm just wondering if you can. Just clarify for me. So the 73.2 million and the option one from external borrowing with. Debt servicing funded by property taxation. So that is not going to the long term borrowing that we talk about with an alternate approval process or referendum that is actually. Just taxation. Is that correct? I don't
Laura Mercer
Speaker identificationConfident
answeredGeneral Manager, Corporate Services
think I'm right. No. Through your worship, the ["councillor"] Prino. So we would access $73.2 million from borrowing and the debt repayment of that borrowing would be funded through property taxation. Through it, but long term through for 20 years, that would be paid through property taxes through either an

Councillor Erin Hemmens
Speaker identificationConfident
Yes

asked
Like to say something about this. Thank you, worship. Regarding option three, I'm curious if the rationale. So option one is. To use the general asset management reserve. Option two is to use a little bit less of that. Reserve. Option three is to use that reserve for debt servicing. Is the intention behind that to keep that reserve at a certain level. So we're not drawing on it to borrow, to build. But we're drawing on it more minimally to repay that debt. Is that the thinking behind that? To leave that reserve a bit healthier? Through your worship.
Laura Mercer
Speaker identificationConfident
answeredGeneral Manager, Corporate Services
Yes. We're trying to keep some resilience in that reserve, so. There are a lot of projects. We have billions of dollars in assets that at some point. Need to be renewed, updated, replaced. So Ms. Fuller needs. As many options as she can. So we were looking at it gives some benefit to the taxpayer of a reduction, but. It still leaves the money in the reserve to be
followed up
used for other projects. I see that. And. I thank you for all the options. Lots of information here. I'm with Councilor Armstrong. I would be very hesitant to see us dip into our asset management reserve for this project.