In a few years, the Town of Bracebridge will be one of the most indebted municipalities in Ontario, according to a Jan. 4 report to council.
The report, done by StrategyCorp Inc., says the town will face “significant debt” in the next few years. They specifically mention the construction of the Muskoka Lumber Community Centre (MLCC) as a reason why.
In April 2022, District of Muskoka council approved a loan just shy of $25 million to the Town of Bracebridge to be repaid over the next 30 years. The money will come through Infrastructure Ontario.
The cost of the MLCC was higher than initially expected and staff had to work with the chosen contractor Aquicon Construction to shave $8 million of the price tag. Paul Judson, treasurer, said in a Dec. 2021 interview with the MyMuskokaNow.com newsroom that “a very significant and unexpected surge in construction price inflation” happened while the town was looking for a contractor undertake the construction of the building.
Coun. Archie Buie pointed out during the recent General Committee meeting that “to nobody’s surprise” Bracebridge is set to deal with high debt. “I’m sure nobody around this council table thinks that’s something to be happy about,” he said. “It’s a reality that we have to deal with.”
Other reasons, according to the report, include the four master plans (Transportation, Dowtown, Climate Action, and Fire) that will be created during the 2022 to 2026 term of council and the local share for the new Bracebridge hospital that will be due during the current term.
While agreeing it’s concerning Stephen Rettie, the town’s Chief Administrative Officer, said town staff uses every tool at their disposal to fund infrastructure projects. “The municipal sector is widely known as underutilizing debt and debt is an important financing tool in every other sector,” he said.
“It’s not necessarily a bad thing,” added Rettie. “It’s not a bad word, debt.”
He credited town staff will being quick to take on funding opportunities to alleviate pressure on the town’s existing debt. “There are lights at the end of those tunnels,” he said. “It’s not necessarily all going be dire and we’re going to be indebted forever.”
Also impacting the town’s bank accounts is Bill 23. The aim of the bill was to make it easier for developers to build housing by cutting back on development-related charges. However, since being passed, the bill has faced significant pushback, including from some municipalities who fear they will lose money based on the lower development fees. StrategyCorp’s report says the town’s financial situation may be impacted as well. Rising inflation and interest rates and a “looming economic recession” are also signals of the challenges the town will face going forward.
“Long-term financial planning is key to being able to plan and prioritize these projects to support the town’s financial sustainability and management of risk,” the report says. “It is also key to be able to demonstrate value for money for taxpayers.”
Buie said in Feb. when council and staff begin budget deliberations, this may force them to make tough decisions about what projects to move forward with and which ones to shelve.