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Andrew Atlin is a Chartered Accountant in St Marys, Ontario.
July 19, 2006 the following letter from him was published in the St Marys Journal Argus.
It outlines how building the Pyramid Recreation Centre will make the Town finances unsound for the next 20 years.
Dear Editor:
Please accept this letter as an open letter to all the residents of the Town of St Marys.
We have one last opportunity to challenge the financial merits of the recreation-borrowing bylaw.
Council feels that it is in compliance with Ontario Municipal Board borrowing limits and feels that they can go forward in good conscience.
However a group of residents is concerned that this compliance is simply a temporary condition.
The facts are as follows:
Maximum allowable borrowings per the 2006 debt limit from the province: $24.8 million (assuming 7 per cent borrowing rates);
Current borrowings per the Town: $3.5 million (includes salt shed debenture in 2005);
Amount available to borrow: $21.3 million.
How much have we committed to borrow now:
Recreation centre: $14.0 million.
Municipal operation centre: $2.5 million.
Water plant upgrade: $1.1 million.
Total new commitments: $17.6 million.
So the net position is that right now we have about $3.7 million of borrowing left below our maximum as of today.
But what about the other identified needs on Council's list of capital projects:
1. Industrial land.
The Council has begun to make inquiries to purchase industrial development land off of James Street South. Current estimates are that $5 million should be set aside to accumulate an acceptable amount of acreage.
Most business people agree this need is crucial to allow the Town to grow its tax base and develop more jobs.
2. Phase II of the water plant upgrade.
Originally, Council felt that about $3 million of improvements were needed to meet provincial requirements.
Therefore, we can expect about $2 million more to be spent on this project.
Water is clearly one Town resource we cannot trifle with.
3.Others?
The Town will be out of borrowing capacity when these projects are factored in.
At the same time, debt servicing will go from about $500,000 per year currently to about $2 million per year when the new commitments are factored in.
The Town currently has about $10 million of tax and user fee revenues.
That means we will need to realize another $1.5 million of revenue every year - a 15 per cent shortfall - for the next twenty years to maintain the status quo.
We know many individuals have pledged support to the project and this commitment will reduce the pressure for the first few years but what happens for the next 15.
The succeeding councils will have to choose between reduced services or substantial tax increases and we won't have any room to borrow for essential capital improvements.
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