GRAVENHURST — The Muskoka Bay Property Owners’ Association (MBPOA) is lobbying its members to speak out about the cost implications of renovating the former health unit building into a new municipal office.
The project comes with a $5.1-million price tag, $1.9 million of which will be used to renovate the office and move the municipal operations. The town spent the remaining $3.2 million to purchase the health unit building.
Growing concerns have been raised in past weeks about how the project is being managed. Council has directed the renovations be completed by a general contractor without public tender. The debt the town will issue to fulfil this and other commitments is also worrying many.
According to the emailed letter from the MBPOA board of directors, the lake association believes the town hall project must be reviewed, and delayed or cancelled until it is affordable for ratepayers.
The email, sent to between 100 and 200 Muskoka Bay residents, encourages recipients to tell council they do not support the debt. It further requests that council controls and reduces infrastructure spending.
Diane Yeates, MBPOA’s past president, said the board of directors is posing questions to their elected representative, Ward 2 councillor Lou Guerriero, and is looking for honest answers. She said the board wants to know the status of the town’s reserves and its current and potential debt.
“We are concerned about the bottom line on debt and the implication on the taxpayer and to our town,” she said.
The group is asking for fiscal responsibility, she added.
The MBPOA believes a number of pre-committed municipal projects such as the purchase of the former health unit building ($3.2 million), financial commitments to the new medical clinic servicing ($1.8 million) and Centennial Centre expansion and aquatic centre addition ($6 million) will be a challenge for the tax base. An additional $1.9 million to renovate the health unit building is too much for ratepayers, Yeates added.
She said the board has agreed to a conference call with Guerriero in the next short while where he said he will respond to all the questions.
According to the Town of Gravenhurst’s draft 2010 budget, servicing the town’s existing $10.75-million debt will cost ratepayers nearly $1 million this year.
Mayor John Klinck confirmed the town will spend about $980,000 in debt repayment or 12.1 per cent of the $8.1 million it intends to levy through property tax in 2010. The town’s tax revenue is projected to increase 10 per cent over the $7.3 million levied in 2009.
Repayments for the purchase of the health unit building and for servicing at the medical clinic will be paid in the amount of $305,666. An additional $674,685 will be paid against Muskoka Wharf debt of $6,748,732.
The draft budget also sheds light on the future borrowing of funds.
In 2010, the town anticipates to request debentures for $1 million for the medical clinic servicing and $1.9 million for the municipal office renovations. The annual repayments are estimated around $75,000 and $150,000, respectively.
In 2011, the town anticipates to request debentures for a further $6.1 million for the Centennial Centre expansion and aquatic centre, with annual payments estimated at approximately $450,000.
Once all debentures have been approved, the town will be swimming in $19.7 million of debt, Klinck confirmed. He said if all the borrowing is successful, the municipality will have only exhausted half of its borrowing capacity as mandated by the province.
He also confirmed annual debt payments could grow to $1.65 million from the current $980,000.
This is in addition to the $6.9 million the town is repaying to itself for internal financing borrowed from the $7 million reserve that was the proceeds from the sale of Gravenhurst hydro. In 2010, a payment of $702,843 will be made. Budget documents indicate some payments will be made until as far ahead as 2020.
When asked if the level of debt is appropriate, Klinck said there are other municipalities similar in size to Gravenhurst that have taken on significant loads of debt.
“We’re well within our legal limit,” he said, adding it would be interesting to see a comparison between similar-sized municipalities.
“We’ve had an era of aggressiveness, growth and infrastructure spending and now is the time to build the reserves back up,” Klinck continued, adding it’s a matter of cycles. “The next step would be to not assume any optional debt even if we might have the ability to borrow $35- or $45 million. It’s probably not appropriate to put that burden on the taxpayer.”
He said the renovation costs for the health unit building came as a surprise to council, but he believes the move is necessary and makes good business sense.
Council’s commitments to a consolidated medical presence and the expenditures that have gone along with it were forced in order to remain competitive, he said.
“I’m not happy we’re in this business (health care) … but the Town of Gravenhurst had to do it or would be faced with a real possibility of not having any physicians in town,” Klinck said.
If municipal revenues don’t meet projections or anticipated assessment growth doesn’t materialize, Klinck said the town would have to eliminate tax increases.
“You react accordingly,” he said, recalling a time when tax rates were not increased after 600 manufacturing jobs were lost in town.
Klinck acknowledged that the town is home to many fixed income seniors and low wage earners, but also noted many higher wage earners in the municipality.
“When you look at the tax rates in Huntsville and Bracebridge, Gravenhurst is still the lowest of its neighbours,” he said. “It’s a lot of debt, no question, but I think it’s manageable and affordable. We have to draw the line, build up our reserves and pay off the debt and wait for the next cycle.”