Greater Sudbury councillors will vote next week whether to ease self-imposed limits on borrowing to allow them to use debt financing if they decide to build some of the big projects they have on the books.
Under provincial guidelines, the city can borrow up to 25 per cent of its annual net revenue, which amounts to $97 million out of annual revenues of $388 million.
But the city's own policy, passed in 2013, restricts borrowing to five per cent of net revenue, or $19 million.
Meeting on Tuesday, councillors will decide whether to increase that limit to 10 per cent, or $38 million.
The resolution is part of the Long Term Financial Plan the councillors will vote on, developed in conjunction with KPMG. It covers the next 10 years and includes:
-- Comprehensive review of key financial policies and procedures;
-- Financial forecasts for operating, capital and reserve spending using sound, reasonable financial, growth and population related assumptions based on past performance, current trends etc.;
-- Changes to existing financial principles from the last financial plan where required;
-- Financial indicators to compare to other relevant municipalities; and,
-- Identify any service level, taxation and rationalization strategies for the city for future consideration.
Under the policy, debt financing would only be considered for:
-- New, non-reoccurring infrastructure requirements;
-- Programs and facilities that are self supporting;
-- Projects where the cost of deferring expenditures exceeds debt servicing costs; and,
-- Securing debt for terms no longer than the anticipated life of the funded asset.
In addition to the $80 million to $100 million arena events centre, councillors are also developing plans to build the Place des arts, the Synergy Centre and a new library/art gallery.
“Council ... directed staff to review the viability of the four large projects,” says a staff report on the plan. “If these projects are to proceed, the most likely source of funding will be in the form of debt. In addition, with the upcoming stimulus programs from senior levels of government, the city should be well positioned to fund its share and this can be accomplished by securing debt.
“The low interest rate environment continues and this would be the most appropriate time to secure debt financing.”
Read the full financial plan here.
