The County of Prince Edward will be financing over $20 million worth of water system upgrades at multiple sites at low interest rates over the next 30 years thanks to a loan approval from Infrastructure Ontario (IO).
The provincial government announced earlier this month IO has entered into a new commitment to provide financing through its Loan Program to Prince Edward County for multiple water and wastewater services capital infrastructure projects.
The municipality is financing 11 water and wastewater projects with a $21,402,870 loan from. The projects range in scope and cost and are located at municipal drinking water and wastewater treatment installations in Ameliasburgh, Carrying Place, Consecon, Picton and Wellington.
A provincial crown corporation that provides Ontario municipalities, universities and other public bodies with access to affordable loans to build and renew local public infrastructure, IO has a high credit rating resulting in a very low cost of capital and very low interest rates for its loans. In a report by County Director of Finance Amanda Carter in March that resulted in Council voting to approve the application it was explained IO will also provide terms of up to 30 years while most financial institutions will provide a maximum term of 10 years.
“Past interest rate comparisons have shown that Infrastructure Ontario rates are lower than any other lending institutions,” Carter said.
Carter explained to Council as these projects are ongoing the intent is to undertake construction loans to cash flow the project costs. The costs will be converted to debentures when the final project costs are known
Council had approved a number of Capital projects during the 2019, 2020 and 2021 Budgets. These projects were to be funded by debt. To date the monies have not been borrowed to fund these projects. Debt servicing costs for these projects has not been budgeted in 2021 but will be budgeted for in the 2022 Budget. The debt servicing costs will be for interest on the construction draws taken in 2021 not the full construction loan amount.
“The current construction loan rate as of March 2, 2021 is 0.61per cent Once debentured each loan will be for a term of 30 years to match the payments with the life of the assets,” Carter said in the report.
Details of the loan agreement were not released by IO in the announcement on May 7.
The investments include Picton Water Distribution ($5.2 million), Picton Water Treatment ($5.6 million) and Picton Wastewater Collection ($5.8 million) upgrades as well as Wellington Water Treatment ($680,500) and Wellington Wastewater Treatment ($2.6 million) upgrades.
Carter’s report noted the loan construction loan requirements for Wellington Water and Wastewater upgrades represent projects that were approved in prior years and are not growth
related. Some of these projects are Warf Street Pump Station Generator Replacement, Manhole Repairs, Wastewater plant upgrades including the Ozone project, Water Valve replacement program, Headworks Grinder, Water Treatment Plant Filter Rebuilds and Highlift Pump.