- Municipal Council
- Chronique du maire
Debt is one of the tools municipalities use to finance their projects. There’s nothing unusual about that. Building and repairing major infrastructures—streets, water mains and public buildings—are expensive. Even for a town in excellent financial health, like Mount Royal, work of this scale usually requires taking out a loan. And it’s actually a good thing that future generations assume part of the costs, as they will benefit from the infrastructures over the years.
The issue of borrowing—and thus of the debt—is nonetheless a constant concern for elected officials as well as citizens. At this point, in the run-up to the referendum on a loan needed to build a new sports and community centre for Mount Royal, misleading claims about the Town’s financial health are being made. This is unfortunate. It is also ironic as, year in year out, the Town’s financial figures are excellent. What’s more, we end each fiscal year with a surplus, a significant chunk of which is used to pay down the debt.
What is the Town’s debt level like today? Under strict control and quite low in comparison to the Town’s property values. Our total debt has gone from $23,227,579 in 2008 to $32,683,400 in 2019, with only slight year-to-year fluctuations. In contrast, our debt ratio has steadily declined. In 2008, the Town’s debt corresponded to 0.55% of our standardized property value; in 2019, it amounted to only 0.43%. In other words, the Town is gaining value faster than it is incurring debt.
While it is true that the sports and community centre project will increase the debt in coming years, it will do so in a controlled manner. Much of the cost of the new sports and community centre will be paid using the $21 million surplus already accumulated for the purpose. The Town has also received a $3 million grant from the provincial government and will obtain a more-than-$4 million tax rebate on the total project cost. The amount remaining to be financed totals no more than $20.3 million, an entirely acceptable figure for a specialized facility worthy of its name, especially when it will also be the first entirely new Town building in more than 50 years.
Why is the loan by-law whose fate will be decided by residents in February for $27.8 million, not $20.3 million? The figure of $27.8 million was calculated in September 2019, when the loan by-law was being prepared by the Town, using a well-defined legal protocol, and when the surplus for the year was not yet known. But don’t be fooled: in this case, the $27.8 million is the upper borrowing limit—the ceiling on a line of credit, as it were—and nothing more. In the end, the Town intends to borrow only $20 million for the new centre.
As usual, the Town’s finances are in extremely good shape. Indeed, it is due to our strategic and disciplined management of public funds that we can now consider investing in new and promising projects, projects like the sports and community centre, construction on which could begin this summer.