Debentures needed to fund road work to keep taxes down
By Bill Rea

Concurrent road reconstruction with the installation of sewers in King City and Nobleton is going to cost around $3.3 million.

Township councillors were told Monday they could raise that money in one year, but that will drive King property taxes up by about 31 per cent. The alternative is debenturing the expense over several years.

Not surprisingly, councillors said they would go the debenture route before trying to sell a 31 per cent hike to their constituents. One councillor joked he'd have to move if he imposed an increase like that.

Township CAO Scott Somerville stressed Monday's information was very preliminary, and staff was looking for guidance on what to have ready for the next session, planned for Feb. 5.

He also said staff was suggesting the debenture to "spread the costs out over a number of years."

There were concerns that a debenture of that size would stress the municipalities borrowing limit, but that will be offset, it's hoped, by expected growth, leading to development levies and increased assessment.

"I see it as an investment in the future," Councillor Jack Rupke remarked.

There was little in the way of definite word on what the tax increase will be, although Somerville said that removing the road reconstruction components could lower it to little less than three per cent. He mentioned 2.8 or 2.9.

As well, staff said there are still some financial details from last year that are not available, which is hindering the efforts to come up with proposals for this year.

"We're still getting bills," Township Treasurer Don Young remarked.

Director of Operations Jody LaPlante said there are still some reserves available that will bring the cost down to about $3.2 million. He added grants might be available that could reduce the figure further, but they haven't been factored in yet.

Mayor Margaret Black was quick to declare taxes will not be going up 31 per cent, but she added there are other issues yet to be discussed which prevents a target figure from being set. "Probably under five per cent," I would think," she said.

Debenturing, she added, "is the only way to go," but she also pointed out additional work on these roads won't be required for many years, adding the anticipated development charges and assessment increases will help too.

A couple of councillors indicated they thought they had been reading their budget information wrong when they saw the 31 per cent figure.

"I wasn't sure what I was reading," commented councillor Cleve Mortelliti.

He also said he was resigned to the debenture route. "It sounds like we're sort of up against a wall," he said.

Being a new councillor, this is Mortelliti's first time dealing with budget issues, and he admitted he's inexperienced. "I'm sure I'm going to learn more as time goes on," he said.

But he said he was puzzled that more money wouldn't have been set aside for this. "I would think that you would plan for road reconstruction," he remarked.

Councillor Jeff Laidlaw was convinced taxes won't go up 31 per cent.

"Not a hope," he said. "I just can't see it."

He also couldn't say what sort of increase would be realistic, but he said the 2.9 per cent that Somerville had mentioned would be consistent with what's gone on in the past.

But Laidlaw was not pleased with the debenture prospect, warning that getting too heavily onto debt could restrict the Township's ability to deal with unexpected issues that could crop up.

"We've taken our credit card to the max," he declared. "There's no more leeway once that's done."

"This councillor will not support that kind of increase," Councillor Bill Cober asserted, stating there will be cuts to some of the other things that were in the draft budget. "We did not yet get out the knife, but we will."

He cited the problem as involving an infrastructure deficit, and stressed the need to get that message to the provincial and federal governments.

He likened it to the condition of a house that needs the shingles repaired. If that's not done, then the plywood would need work, and after that the trusses.

"It just goes and goes and goes," he said. "You have to fix it before it gets worse."

He also was adamant that taxes won't be increasing 31 per cent, and speculated that staff included that figure as a sort of wake-up call. "It's a wake-up call not only to us, it's a wake-up call for everyone in this province."

"There is no way in the world that I would ever, ever even think of going to the public for that kind of an increase," Rupke declared after the meeting, adding debenture is the only way to deal with the issue. He observed the increased assessments will help pay off the debenture in years to come.

Rupke also said there wasn't enough information to predict what kind of tax hike might be coming, but he wasn't as optimistic as some of his colleagues.

"I think we're going to be lucky if we can keep it under four per cent," he commented. He said he'd like it to be lower, "but you've got to be realistic too."

Councillor Jane Underhill said the 31 per cent figure didn't come as much of a surprise, stating she knew installing the sewers was going to cost more eventually. She also said she had thought developers in King City would pay to have roads restored to their previous standards.

"Eventually, we'll be paying it through a debenture," she observed. "It will just be spread out more."

Underhill was another who wondered why there weren't more reserves set aside for this.

"I don't know how we got so far behind, but we have," she commented.

Councillor Linda Pabst called the idea of a 31 per cent tax hike "totally unacceptable."

"I don't really think staff thought that's what we'd go with," she added.

Pabst also said it was still too early to tell what tax rate will come about. She did say Monday's meeting offered "a good overview of what to expect and what we have to consider."