Published January 16, 2012 on OurHometown.ca
Much ado about Benson Centre financing
The Benson Centre is a first-class facility, there is no question of that. The hard work of the organizers to raise the over two-million dollar community contribution was outstanding. The residents who helped raise that money are to be thanked as are the many businesses who stepped up financially. Everybody has done their part, except for Cornwall City Council.
City Council has now brought up several times – plans and motions on how to pay their part of the bill, approximately 10.7 million dollars. They have the infamous “Progress Fund” which they collect interest from and it makes sense to get a loan, and the pay the loan off with the interest. In fact they have agreed to that plan a few times already. This way the fund stays intact and it doesn’t cost the city or taxpayers anything for the Benson Centre.
Wrong. It does cost the city and taxpayers because it locks up that fund into a task to pay a loan for a long period of time. A 20-year infrastructure loan for a municipality is not uncommon and while interest rates are low now at approximately 5%, that is still a cost. If the interest from the Progress Fund is paying a loan for 20 years, there is nothing else that money can be used for. The cost of that interest at 5% per year will mean that the 10.7 Million will have actually cost 17.2 million.
Why should the city/taxpayers pay over 6.5 million or more 61% more overall for this? The city could pay the bill from the Progress Fund, that would reduce the fund to 14.3 million, but that amount would still be generating interest year over year. That interest could be used to repay the fund back to 25 million, or if needed, to fund other obligations/projects. Borrowing from their own nest-egg costs them nothing, in the short or long term.
The argument has been made that the city needs to keep the fund intact to help lower taxes. City council has no plan or goal to reduce taxes, nor the fortitude to make tough decisions to keep taxes in line. Coupled with that is an increase in MPAC values which already add money to the city coffers. Lowering taxes isn’t a goal, isn’t a plan for the council. So it’s time to move on and do something that will truly work for the city and is smart long-term.
It would take discipline to pay back the Progress Fund, and we’ve seen already with three motions so far, lots of discussion and no progress, that council lacks that. Meanwhile the bill needs to be paid.