Cumberland’s council made the choice to pay more each year over a shorter term but less overall for borrowing toward its new fire hall.
At the Nov. 23 council meeting, members discussed a staff report that outlined estimated costs on debt for the $4.2 million project.
“We have not finished the project yet,” said Cumberland’s chief financial officer Michelle Mason, “but it’s well underway.”
With funding from the province’s Municipal Finance Authority, the market interest rate is 2.43 per cent. The question for council was whether to pay this off over 20 or 30 years. Mason said they would be locked in for 10 years after which time the village can look at refinancing the debt.
The staff recommendation was for the former choice. Considering market uncertainty, Mason used a rate of 2.8 per cent for the 20-year term and three per cent of the 30-year term. These are only estimates and will be determined by what rate MFA can secure in the spring. Property taxes are to be the funding source. About 20 per cent of fire protection costs are covered by the regional district because Cumberland provides service to a part of Royston. Staff are also calling for measures using reserves to stabilize resulting tax increases in the coming years.
The staff report shows the total of the project over 20 years, including interest, works out to just over $5.9 million. By comparison, a 30-year period works out to a little more than $7 million, or about $1,150,000 more.
“However, if you go with the 30-year term, the annual estimated payments are less than the 20-year term,” she added.
Coun. Gwyn Sproule asked whether it was worth considering the longer term because, despite the higher total, the amount could be spread among more residents over 10 additional years of growth in the community.
“If you have a 30-year debt term, more people into the future will be paying towards the fire hall,” she said.
RELATED STORY: New Cumberland fire hall goes to rezoning hearing
In the end, council opted for the shorter term, passing a motion to authorize the borrowing of $4,200,000, as authorized through a bylaw passed in 2019 that received voter assent. This will be over the 20-year period. The village also needs regional district consent for the borrowing, so the project can be included in the CVRD security issuing bylaw by a Dec. 11 deadline.
One concern of some with the project has been the size of the debt for the small but growing community.
“This is a really big debt…. I certainly have had my concerns,” said Coun. Jesse Ketler. “It’ll be great to have a brand-new fire hall. Obviously, it does come at a huge cost.”
While the community has been able to line up grants for other infrastructure projects of late, it is covering the costs of the fire hall.
Cumberland is far from the only small community with these concerns. Earlier in the same meeting, council discussed correspondence from Mayor Dennis Dugas of Port Hardy, who was raising the issue of small communities in being able to access provincial support for fire protection. Council agreed to appoint Mayor Leslie Baird to a select committee of mayors of small communities to work on the issue.
“The government might listen if we’re all speaking the same language,” Baird said.
mike.chouinard@comoxvalleyrecord.com
Like us on Facebook and follow us on Twitter.