The Town of Ladysmith city council has approved borrowing up to $6 million over 25 years to help fund the municipality’s new water filtration plant.
Island Health has required the town to build a new plant that will continue to provide safe, drinking water and accompany the terms of the town’s water supply operating permit.
“When we’re looking at other communities around British Columbia, I think that we’re going to be able to offer the very best value for investment for our residents,” said Mayor Aaron Stone.
Construction costs for the new facility are estimated to be $13.3 million, which will be offset by a $8.8 million grant from the federal and provincial governments received earlier this year.
In late November, the town notified Island Health that it wished to amend the completion date for the plant to 2019.
The town will seek residents’ approval of the borrowing bylaw through a 30-day Alternative Approval Process (AAP) likely to take place in February and March 2017.
There are currently 3,643 parcels in Ladysmith plus 153 equivalent parcels from other service areas that will share in the debt.
The interest rate for the town borrowing funds for the plant is guaranteed for the first 10 years. Future rates are set in five and 10 year increments.
“We’re at a record low interest rate time and so there is no better time to borrow money for a large project,” said Coun. Steve Arnett.
A summary of borrowing periods estimated by staff show a 25 year period with an interest rate of 3.51 per cent equaling a $375,167 estimated payment by the town.
The resulting parcel tax increase would be $99, resulting in a $300 total for 2017.
New parcels coming on board during the repayment period would also share in the debt.
The town is estimating there will be approximately a $460,000 per year increase to operate the plant, equaling an additional $120 in parcel tax per year, according to the staff report.
Responding to a questions from Coun. Carol Henderson and Mayor Stone, Director of Infrastructure Services Geoff Goodall said significant capital costs such as new membrane that could need to be replaced after a decade are not included in the parcel tax projections.
“I don’t know the cost of the membranes but they’re quite expensive to replace…” he said, later in the meeting adding that a membrane could be upwards of $1-million.
“We will be brining those (projections) in when we get more detail on what the plant looks like.”
The town plans to hold public information sessions in the new year to discuss the project with residents.
“I think that when you get an opportunity like this with such significant federal and provincial money behind it, you don’t do anything but say thank you very much and move as quickly as effectively and efficiently as you can,” Stone said.