Tbnewswatch Local News
Saturday July 4 2015
7:44 AM EDT
2014-03-24 at 22:48

Management plan

Work begins on Golf Links Road in this file photo from 2013.
tbnewsatch.com file photo
Work begins on Golf Links Road in this file photo from 2013.
By Jamie Smith, tbnewswatch.com

The city is taking on more debt but it’s in good shape to do so administration says.

City council approved $18. 2 million in new long-term debt Monday night, bringing the city’s debt total to around $184 million. It also voted to cap the city’s debt service ratio, which compares annual principle and interest with city revenues, at 10 per cent. That number is currently around six per cent and well below the province’s maximum limit of 25 per cent.

Some councillors worried that would mean the city would continue raising its debt in the future. But city manager Tim Commisso said any new debt would always need council approval and there is no limit right now other than the provincial one.

“Really we don’t have a control mechanism right now,” he said.

As for the new approved debt, $8.2 million is for Phase 2 of Golf Links Road reconstruction while the other $10 million, which was approved separately and unanimously, was for Tbaytel.

Coun. Linda Rydholm wanted the city to take $3 million from Renew Thunder Bay in order to pay for some of the Golf Links Road project. Coun. Mark Bentz agreed.

“You don’t take a loan if you don’t need the money,” he said.

But other councillors said the fund, which started at $29 million and is currently around $22 million, is for the event centre and other projects to leverage funding from the provincial and federal governments. They don’t want to see it whittled down and jeopardize the project when it comes time to ask for matched funds.

“We need to have that money set aside for that,” Coun. Rebecca Johnson said adding she is concerned about raising the city’s debt.
Renew Thunder Bay also makes about $1 million a year in interest, which goes back into the fund Commisso said.

The city currently spends around $6.7 million in interest ant $18 million per year in principle on its debt.

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AnonymousOne says:
Clearly we cannot afford the even center.
3/25/2014 9:11:50 PM
Eastender says:
Lets just call it what its real intention is, a hockey rink, because that is its main purpose and the main structure will be, a hockey rink. Its being called an event centre strictly to befuddle the issue. The two levels of govt. have already stated, No money for hockey arenas. So if you call it an event centre, that changes everything?
3/26/2014 9:48:03 AM
fastball says:
I agree totally east-ender. Calling this Hockey Arena anything but that is a gross distortion. I wonder if this council has ever been to a convention center, because if they had, they'd instantly realize how much this project doesn't resemble one?
3/26/2014 10:33:59 AM
chezhank says:
The Debt Strategy did not include Option 3 and that would be to take $8.2 million out of Renew Thunder Bay and pay for Phase 2 of Golf Links/Junot.
When the province gave the money ($10 million) to the city in 2008, it was to help with infrastructure.
Council chose to park that money in the Renew fund and then claimed we have an infrastructure deficit and raised taxes to address it.
I believe we have a council and administration that suffers from BSOS, (Bright,Shiny,Object Syndrome).
To see so called “fiscally responsible” councilor Johnson agreeing to borrow more money for Phase 2 was surprising.

henry wojak
mayor in waiting
3/25/2014 4:47:50 PM
brandon says:
I've got that South Park song about "his waterpark" stuck in my head....

Except that the lyrics surround "priorities"
and there are lines like

"City council has never been crazier"
"This city was ours, our home.... and they've spent it all away!"
etc. etc. The song practically writes itself.... now.... we need to contact the person who voices Eric Cartman to sing the Thunder Bay version, and "Priorities" will be a hit. At least outside the city. Here, its not a joke, because this is actually happening and it would appear that we can't stop it.
3/25/2014 10:55:07 AM
fastball says:
I can't wait to hear that song. I hope it's played on the steps of city hall when this current council walks out the doors for the final time ever. PLEBISCITE NOW!
3/26/2014 10:45:12 AM
tiredofbull$ says:
Is this a new side of you fastball, before you were against a plebiscite until as you said we have all the facts. I hope what you are now saying is true, that we need a plebiscite now, everyday something is coming out of how this council and city administration is mismanaging our money.
3/26/2014 11:53:15 PM
Why was Tim so eager to go behind closed doors when he was asked if insurance doesn't pay for sewage plant issue how much and who pays for it. How many millions will that be? Will we have to borrow for that?
3/25/2014 10:25:18 AM
musicferret says:
A very good question. Even if insurance covers the whole thing, which it won't, who would be stupid enough to cover us in the future with the existing infrastructure? If they did it would be many millions more per year at best.

We should have a full public accounting of our liability exposure on this issue. Its a big one.
3/25/2014 1:37:00 PM
musicferret says:
Anyone who thinks Tbaytel is not in trouble, jump on over to their Facebook page to see the people outraged with their service and pricing.

They are in big trouble and will be killed by Bell in the next 1-2 years, as Bell is building bunches of new towers.
3/25/2014 10:21:07 AM
debt collector says:
Put up or shut up time. Please post tbaytel's financials showing they are 1 or 2 years away from being "killed by Bell."

Your uninformed opinion caries no weight and a dozen or so constant complainers out 8723 facebook fans does not indicate they are in trouble.
3/25/2014 11:58:44 AM
musicferret says:
Debt collector and sky high,

Financials are great for the past, but do not show an accurate picture in an industry that works in 3 (and now 2) year upgrade cycles. The full impact will start to be shown in the next 1-2 years

What has changed?

1)Increased competition, specifically from Bell
2) Increased data: customers are getting massively increased data and voice in their plans rather than the paltry amounts of yesteryear that ended in overage charges and profits.
3) Reduced profits to hold existing customers: plan expires, you must now sign them up on a plan competitive with others NOW, not 2 years ago. I.E. better data/minutes for less money.
4) Customer retention: Gone are the days when there were no options in T. Bay. Bell has and is putting up bunches of towers, and is offering lower prices.

You look to the past to try and explain a marketplace that has fundamentally changed. Foolish. I look to the future. Please use some facts and tell me how I am wrong. Good luck.
3/25/2014 1:31:24 PM
debt collector says:
Why am I not surprised you are spinning your lack of facts back on sky high and myself. That's what one tends to do when they have no proof to back their opinion.

Do you really think tbaytel would be spending the amount of money they are if they weren't in a position to compete and win?

Do you think city council would allow them to borrow $10-million if they didn't see a path to victory?

Do you really think tbaytel doesn't have current financials showing they are in fact competing and winning?

The marketplace changed when Shaw got in to the home phone business. Uninformed people such as yourself predicted they would be killed off in 1 to 2 years by Shaw. And yet here we are 6 years later and tbaytel's revenues are continuing to grow.

Unlike you, I deal in fact.


Tbaytel's revenues have also grow since Bell entered the market, up from $130-million to $170-million in 2013.
3/25/2014 2:37:58 PM
musicferret says:
Thank you for some fact! Revenues are different than profits however, and Tbaytel is now into digital TV, which increases that top line.

Bell is different than Shaw: they are coming in big and for the long term. Shaw came in small with nowhere near enough towers or deals to grab the market.

Your figures are again last year..... its next year where we will start to see the big hit that Bell will cause. Their $50 deal was only out briefly before Christmas. Now, its going on full time. Just give it time for more Tbaytel customers to come to the end of their contracts and you will see a loss in customers that would not have happened before.
3/25/2014 4:16:57 PM
debt collector says:
You obviously didn't read my whole comment. "Tbaytel's revenues have also grown since Bell entered the market, up from $130-million to $170-million in 2013."

This comment shows just how uninformed you are...

"Bell is different than Shaw: they are coming in big and for the long term. Shaw came in small with nowhere near enough towers or deals to grab the market."

Shaw isn't and has never been in the cellular game, so this just proves you have no idea what you are talking about.

Shaw also came to the market with $5.00 home phone service, if that isn't a deal then what is?

Again please point me to the proof you are using to validate your opinion that tbaytel is 1 or 2 years away from being "killed by Bell."

Until you do, you are just another opinionated coffee shop dweller.
3/25/2014 7:48:32 PM
musicferret says:
OMG! Typing error. Substitute "Rogers" for 'Shaw'.

If there was 'proof' for things that haven't happened yet, I would be a time traveller. I simply presented my case. You disagree. Sorry about the Rogers/shaw thing, that obviously might change much of what I wrote for you. :-)

Remember, I could equally ask you for 'proof' that they will still be around. You did not present a case showing that they will not be greatly affected by the Bell entry.

Two different viewpoints, trying to find a crystal ball into the future.
You appear to think that Bell coming in will change nothing. i disagree based on talk about town. Neither of us can prove it, its simply anecdotal evidence and educated guesses as to what is occurring in the market.

3/26/2014 9:46:49 AM
debt collector says:
Does all the spinning make you dizzy?

Again your comment is wrong...

"Their $50 deal was only out briefly before Christmas. Now, its going on full time." Actually, they launched with this promo price in
October 2012 and they have tried to raise it to $60.00 several times, only to drop it back to $50.00 after a few days.

Maybe you need a history lesson.

Rogers was the first company to offer cell service in Northern Ontario, tbaytel the second. Rogers for years was tbaytel's equal and then bam, they died because they refused to invest in NWO.

Then Superior Wireless came and went in under a year.

Next up was Telus/Koodo who through a roaming agreement was able to access tbaytel's CDMA network. If anything a company with the same coverage should have put tbaytel out of business, but they didn't.

The fact you and a few of your uninformed buddies at the coffee shop seem to think tbaytel is dead is laughable.

PS I like Celtic Music
3/26/2014 11:53:02 AM
sky high says:
Quit lying, you don't understand an iota about finance. You're just sitting her all day long fear mongering and looking for attention. If Tbaytel was in trouble, they wouldn't be paying millions upon millions of dividends to the city. What is wrong with you? Do you think before you comment?
3/25/2014 12:11:30 PM
brandon says:
Ummmmmm...... takes years to get out of old plans. Im iching move to someone else. Tbaytel sucks.

That dividend is gouge-idend.
3/25/2014 1:34:39 PM
sam says:
So we have this outstanding debt costing us around 3%-4%, and our bond portfolio of $90 million lost 1.5% last year, of course hindsight is perfect, but maybe we should have most of the cash paying down the debt. I know the city must maintain reserves in cash. But if your debt is costing you more than what you are earning on your cash, put as much cash on the debt as possible. That is good financial management.
3/25/2014 10:19:12 AM
fluffy says:
I bet they keep increasing our taxes and still build their hockey arena.
3/25/2014 9:20:12 AM
Luxe says:
I'm confused. If Tbaytel "gives" money to the city every year, why do they need a 10 million dollar loan? Should they not have planned for that instead of taking money that is going to require paying back interest?
3/25/2014 8:58:36 AM
sky high says:
That's a nice principle to interest ratio. And we are well, and I mean well, below the amount we can borrow. Tbaytel in great shape, doing what's right for the community and creating jobs galore. Becky Johnson on board and protection the Events Centre fund. All in all good news for Thunder Bay. I realize the pessimists are going to start howling after reading this article but let's just ignore them
3/25/2014 8:04:29 AM
The Badger Mountain Hermit says:
"doing what's right for the community"..well, we don't have free city-wide wireless internet, do we?
3/25/2014 1:14:09 PM
Waldo Lydecker says:
The city receives around $1 million/year in interest with re-new Thunder Bay, but we then throw away $6.7 million/year on our enormous debt.

This is blatant financial mismanagement and needs to cease immediately.

This interest we pay to service the growing debt is also adding substantially to the cost of the event center.

The pursuit of an event center must stop immediately. Its obvious we cannot afford this as we are mismanaging ourselves into financial oblivion more and more every year.

How stupid are these councillors and mayor?
3/25/2014 7:19:56 AM
ring of fire dude says:
“Really we don’t have a control mechanism right now, he said." No kidding , we are 184 million in debt .
3/25/2014 5:09:45 AM
sandstorm says:
seriously 10 mil for Tbaytel?? WHY??? don't they gouge us enough with their horrible service and sky high prices? charing people $69 a month for a plan that was $50 just a few months ago is ridiculous. The city needs to sell this.. NOW. sure we get a "dividend" from them.. but really.. when our tax money is going to one crappy company like that how much are we REALLY saving?
3/25/2014 2:10:57 AM
fairlane says:
You have no clue. You think $69 is high? Go to the national rogers site:

They're STARTING at $80. $69 from Tbaytel is still a good value. Horrible service? That's so two years ago.

Let's look at your math. We sell the company and lose a $21mil annual dividend. This is a loan (to be paid with interest).

Trust me, we're saving tons.
3/25/2014 9:40:51 AM
MD says:
I'm paying $50 a month with TBay Tel for: unlimited texting, unlimited Tbay Tel to Tbay Tel calling, 5 GB data, free Canada and US long distance calling (for the first year), Canada wide free roaming, after 5pm and weekend free calling, 200 minutes per month, call display and voicemail. That's a hard plan to beat, normally would be around $80+ but got it through a promotion. Just like any kind of service or retail you need to get a plan / product when there are special offers available or negotiate a price. I hated TBay Tel when I was transferred from Rogers but they have improved of the last 2-3 years.
3/25/2014 12:05:31 PM
outsidelookingin says:
fairlane hit it on the nose! If it wasn't for TbayTel's rates we would be paying big for cell phone plans. I couldn't believe it when I set up my daughter with a cell phone in southern Ontario. Basic Internet rates are through the roof too!


" Telus Corp., BCE Inc. and Rogers Communications Inc. do all now charge $80 per month for the plan CBC referenced, which includes 500 MB of data and unlimited talk and text."
3/25/2014 12:17:42 PM
j_northey says:
As a (hopefully former soon) Bell user I can tell you they are no great shakes. Also have used Rogers and Telus and had issues with coverage in the Toronto area, let alone up here.

TBayTel sends profits back to the city - that is a good thing to help keep taxes reasonable. I'd rather than then having the profits go to a big corporation in Toronto. As I read it TBay sent $15 mil to the city then asked for $10 mil back - still profitable.
3/25/2014 3:11:35 PM
tiredofbull$ says:
It does not take a math wiz to see we are in bad financial shape as a city.
1. If the city does get provincial and federal dollars for a multiplex (which I hope we do not) and the city has $22 million and the others match it for a total of $66 million. Where is the other $34+ million going to come from?
2.The city makes $1 million in interest from the Renew fund and puts it back into that fund, but pays $6.7 million in interest on our loan of $184 million. This does not make any financial sense, any real financial advisor would tell you to put that $1 million against your debt.

We should be using that Renew fund to pay for Golf Links instead of borrowing the money and also tell TBayTel to go borrow their money on their own. This city needs to crack down on all their foolish spending (including the multiplex) and start to pay off this loan. Best way to start off is by voting all these clowns out of office and firing these city administrators that are giving us this bad advice.
3/25/2014 12:51:47 AM
old vienna says:
This is going to be another 'Big O' Olympic Stadium in Montreal. It took montreal 36 years to pay off the Big O. Looking at thunder bays demographics, I don't see thunder bay ever paying off the event centre. Big O original cost 134 million, when it opened in 1976 it cost 234 million. By the time taxpayers paid it off in 2006 the total cost amounted to 1.61 million. The demographics of thunder bay spells financial disaster.
3/25/2014 2:33:11 PM
old vienna says:
correction- 2006 total cost 1.61 billion.
3/25/2014 4:10:47 PM
j_northey says:
The cities debt ratio is something the feds and province can only dream of. As long as it is used for long term projects I can live with the debt much like I can live with a mortgage for my house or a loan for my car.

The money saved is so the city has cash available immediately for a major project - the province and feds like to be certain the project will be completed if started and that is the easiest way to cut down political issues (ala Toronto with pretty much anything) as the cash is there now and you can't always get a loan of that much that quick if needed.
3/25/2014 3:07:26 PM
Me n My Opinion says:
According to the 2012 financial statements (most recently completed) on their website, the City has about $120 million in cash and investments that they earn interest on, as well as another $80 million or so in accounts receivables. The interest they earned on those investments was at a higher rate than the interest they paid on their long term debt. That's not to say that any new debt they acquire will be as low as the current debt is, I don't know, and I doubt many of the posters on this forum do either. My point is, again (similar to the Event Centre plebiscite discussion), until you have all the pieces of information, it's impossible to make an informed decision. Coffee shop discussion about debt levels should be accompanied with the discussion of interest earned on investments. Until that piece of the discussion happens, the debt discussion in and of itself is pointless.
3/25/2014 3:11:53 PM
chezhank says:
@Me n My Opinion
If you looked further on the financial statements you would see that the city had a net debt in 2012 of $80 million.Read Net Debt.
3/25/2014 5:21:35 PM
Me n My Opinion says:
That's not my point Henry. There's two sides to every story, and error by omission is still an error. I assume you're not refuting my point about the rate of interest earned being greater than the rate of interest paid on the debt? That being said, the overwhelming majority of the debt is from 3 major projects - the water and sewage plants, as well as the money borrowed for rebuilding the nursing homes. The rates will never rise on these, and all are in the midst of being paid off, and are addressed in the city's long term financial plan. I'm not advocating stupid borrowing, but well planned debt financing can be smart. When interest is as low as it is for the city to borrow right now, properly managed, it can be a benefit. At the average rate the city is paying right now, it will likely be a long time before it surpasses what they're earning on their investments.

Not all debt is bad. It can be, but it's not necessarily, and to assess it properly, you need to see both sides.
3/26/2014 11:50:45 AM
smartguy83 says:

$1M on $22m = 4.5%
$6.7M on $184m = 3.6%

Therefore they are coming out ahead. Further, if they hold on to the $22M + interest earned and double or triple it, they will be out even further ahead.

Any human who knows anything about finance would say leverage yourself if you can get a better return on your cash.

Common sense.
3/25/2014 3:54:50 PM
Eastender says:
Sure, why doesnt the city just borrow a billion dollars and gain all that interest.
Money for nothing, right?
Theres this little snag called "risk"
2008-2009 seems to come to mind!
As any financial advisor worth his suit and tie will tell you, its very risky to borrow money to invest.
3/25/2014 6:24:03 PM
tiredofbull$ says:
Maybe we are ahead in the interest portion right now but behind on the $ figure. -$6.7 million + $1million = -$5.7 million on the interest portion. Plus that is considering if we keep the Renew Fund at it's present level of $22 million. If we spend it plus some on this stupid multiplex idea, it will be back to a strait -$6.7 million in interest + the interest on how much more we have to borrow. The only common sense is to get rid of this spend crazy city council and administration.
3/25/2014 10:10:40 PM
Eastender says:
If you are 184 million in the hole, how do you figure you have anything in the renew Thunder Bay fund. By my math, you subtract 22 million from 184 million, and you are still in debt 162 million. You have zero leverage. You never had any leverage.
If tne provincial and federal governments give you money for a hockey complex, based on the phoney renew Thunder Bay nest egg, then they are dumber than a box of nails.
Use the money to fix the existing infrastructure. Why pay all that interest.
Dont any of you watch Susie Ormon?
3/24/2014 11:42:29 PM
cm punk says:
Almost a 200 million dollar debt. WOW!
Not surprised at all here.
City Council meetings are the new reality television show.
Extra butter for my popcorn please
3/24/2014 11:33:14 PM
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