Town to borrow over $2 million to cover costs

After weighing its options to balance the 2003 budget over the past few weeks, council gave the go-ahead Monday night for the Town of Fort Frances to borrow $2,340,712 to cover capital projects this year.
The town is looking to cover this cost—which includes work on Front Street ($672,875), the Portage Avenue water line ($629,074), the La Verendrye Parkway ($750,000), and more—by borrowing from the Ontario Municipal Economic Infrastructure Financing Authority (OMEIFA).
OMEIFA is a fairly new program which allows municipalities to finance more infrastructure than they could with individual borrowing programs.
OMEIFA accomplishes its goals by issuing provincially tax-exempt Ontario Opportunity Bonds, and then using the proceeds to provide loans to municipalities at interest rates that are 50 percent below market rates.
In the town’s case, these borrowed funds will accrue interest at a rate of 2.46 percent annually.
Additionally, the town is spending more than $2 million from its reserves this year to pay for several projects not covered by OMEIFA, such as sidewalk repairs, and the projected deficit of $532,918.
These capital projects, which were not unexpected but in fact part of the 2003 budget, include road construction—Lyndy Place ($262,717); engineering work—Portage Avenue underpass ($69,077); 2002 sidewalks ($92,000); 2002 Fifth Street storm sewer ($853,123); 2002 La Verendrye Parkway ($415,000); and 2003 sidewalks ($198,500).
This leaves the town with $4,622,094 in total reserves.
While this decision solves how the town is going to pay for all the expenses, which for the most part it was aware of during the 2003 budget process, it doesn’t mean it’s easy to see that money coming out of reserves.
“I’m definitely not satisfied we’re living with a deficit,” said Coun. Deane Cunningham. “But I am satisfied with the way town managers and administration have determined the areas we have to watch, and tried to correct them.”
Coun. Cunningham also noted they will continue to cancel projects and keep costs to a bare minimum until the end of the year, as well as look to the 2004 budget and try to establish realistic operating costs in the future.
“I never voted in favour of the 2003 budget in the first place,” said Coun. Roy Avis. “We balanced our budget in 2003 by taking out of reserves.
“It’s like balancing your chequing account by taking out of your savings—eventually, you’re left with no money,” he argued.
The nod came at Monday night’s regular meeting, at which council approved a report from assistant treasurer Laurie Witherspoon. Several options were first presented at a committee of the whole meeting last Friday.
Council was required to decide how to pay for the projected shortfall in 2003 and its other bills before Nov. 30—the day before the newly-elected council takes over.
Town management and administration were able to reduce a shortfall in the 2003 budget from almost $1.5 million to about $532,918 after spending more than a month going through the books and tracking down accounting errors by former municipal staff.
As previously reported, the town and new council already has committed to keeping a tighter rein on its bookkeeping in the future.
Regular reports are to come before council and management so they can keep track of revenues and expenses—and compare actual and projected costs within the budget throughout the year.
(Fort Frances Times)