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by Isabel Mosseler

West Nipissing municipal council authorized the corporation to borrow $8.25 million for the construction of the new OPP West Nipissing regional headquarters, to be built in Cache Bay over the next year. The approval, given at the October 15th council meeting, did raise concerns among some councillors who feared the costs might be more than projected. Questions were raised by Councillors Lise Sénécal and Léo Malette as to the nature of the two separate loans. One is projected to be a ten-year loan to reflect the 48% contribution of the province toward construction, while the municipal portion of 52% will be amortized over a 30-year period.

In a subsequent interview, town Treasurer Alisa Craddock hoped to clear up any confusion on the part of taxpayers. “Because we are doing construction, it will be coming as construction instalments. It’s not like we’re being handed $8 million tomorrow.” She explained that once a construction schedule is in place, her role is to submit instalment requests on specific dates to meet construction expenses, and Infrastructure Ontario will forward advances based on the cash flow needed during the construction process.

Craddock clarified that there are two separate divisions of Infrastructure Ontario – one that handles provincial infrastructure assets, and another branch that handles infrastructure loans. “They take responsibility for all the facilities across the province, but they have a whole other division that deals with financing… One of the advantages of financing through Infrastructure Ontario as opposed to bank financing is that they can get really good rates, and they can lock in those good rates for 30 years. For bank financing, I can get a loan for 30 years but have to refinance every five years at whatever the rates are. So this gives us consistency.” She noted that current rates are 2.39% for the 10-year loan and 2.87% for the 30-year loan. 

To add to the confusion, Infrastructure Ontario will be a lessee as well as a lender, under two separate umbrellas. “Construction is under instalments. Once the building is built, the upfront advances turn into a loan. For this project, we will be breaking the consolidated disbursements into two loans, with different payment schedules. At the end of construction, the municipality will have a building and two loans in the total amount of $8.25M or less, whatever the actual construction costs are,” said Craddock. The costs will then become recoverable, including interest. “We will get into a lease with Infrastructure Ontario on behalf of the province, and the lease has several components and one component is the capital recovery – so we’ll get to recover our capital costs, which includes the interest. We will take a look at the costs in totality and it will cover everything that has come up to that point including interest payments.”

Craddock admitted that the arrangements may not be clear to those unfamiliar with accounting processes, but she assures that all costs will be factored into any lease agreement. “If it costs us $200K to operate the building, then 48% of these operating costs, [Infrastructure Ontario] will pay. The construction cost is going to be added on to the lease.”

She further added that in the final analysis, the asset will be entirely owned by West Nipissing. “Yes, at the end we own a building. Our police force is still there and we pay 52% for that.” She added that good planning also covers any future large costs expected for the building, such as leasehold improvements. “The portion that is ours has always technically been part of our responsibility. But yes, we’re going to have a building that we built, as opposed to Infrastructure Ontario owning the building and us having to pay them rent for the space. We own the building and we’re going to continue to collect this lease payment from them.” 

“When we first did this proposal in 2017, I assumed in my numbers an $8M building that the municipality paid for 100%, with a 30-year amortization with loan financing. The financing has been there as part of the proposal from the get-go. So when they came and said, ‘Hey, how about we take part of a building from you and we’ll do this joint thing?’ We said okay. …It is important to know this is not surprise financing… We’ve known from the beginning that we have had to build and finance this building and it was all built into the cost of transition.”

Craddock added that the municipal portion of 52% will be paid over 30 years to allow for lower payments. She indicated that the 48% contribution by the province was a windfall. “We’re getting the money but it will be a municipal asset.” This contrasts with the other nine new OPP facilities being built by the province at 100%; those buildings remain the assets of the province, she explained.

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