Guelph targets $115M in loans to finance construction works
The City of Guelph could be poised to take on tens of millions of dollars in new loans to finance a handful of construction projects.
A staff report to be presented to council on April 6 recommends that the city consider loans of as much as $115 million over terms of 20 years or less.
The loans would be needed over the next three years to help fund the construction of several capital assets, including the F. M. Woods Water Treatment Plant ($14 million), the South End Community Centre ($37.55 million), the redevelopment of the Baker District ($11.25 million), and construction of a new central library ($52.2 million).
The city would benefit from historically low borrowing costs, and aims to pay back the loans through a combination of user service fees and development charges.
The city also plans to use a staggered approach to taking on the loans. For example, rather than committing to a single loan of $115 million, it aims to take on several smaller debentures over the next six to 12 months.
“Due to the ever-changing and volatile nature of the current market conditions, staff are seeking flexibility to go to market immediately when the financing agent assesses it to be the best opportunity,” the report notes. “The financing agent can provide advice based on other products in the market regarding amount and term, enabling access to just-in-time decision-making within a maximum council-approved envelope of $115 million.”
The city has also been asked to take out a further $2 million in debentures to support the Guelph Cemetery Commission (GCC). That money would be used to create additional interment spots in Woodlawn Memorial Park’s (WMP) natural burial area, increasing WMP’s existing office space, and increasing cremation interment options by adding more columbarium walls and garden graves.
The staff report indicates the city has had mixed success with similar request in the past. Where it had a positive outcome with Guelph Junction Railway Limited, the reverse was true of a loan it took out on behalf of Guelph Community Sports in 2019.
“Given this risk, staff would recommend additional due diligence by the city in understanding the capital projects and the long-term business plans that would support the repayment of this investment,” says the report. “This process will require both legal and finance staff resourcing and, for this reason, staff are seeking to understand if council is interested in pursuing a debt arrangement with GCC prior to work being undertaken.”
Another option might see the city guarantee a loan for GCC through Infrastructure Ontario.
Work on the other three projects, meanwhile, is poised to begin.
Design work on the F.M. Woods Water Treatment Plant, for example, is complete, with the city expecting to award a construction contract this year. The plant, which treats up to 80 percent of Guelph’s water, requires significant upgrades.
The South End Community Centre, meanwhile, is a proposed multi-use indoor recreation facility. Final design for the facility was completed in February 2021, with contractor prequalification and contract expected before the end of the year.
The new Guelph Central Library is being built as part of the broader Baker District Redevelopment project. Finalization of agreements with the site developer and detailed design of the facility is expected by the third quarter of this year, with site work expected to begin in early next year.
The Baker District Redevelopment more broadly aims to transform the existing surface parking lot and adjacent properties fronting Upper Wyndham Street into a mixed-use development with public and private components.
Work is planned to begin in early 2022 after finalization of the urban design site plan. Construction is expected to be completed by 2024.