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.