With a site for the Community Safety Building going through its final stages of approval, and the project costs professionally estimated, Council will be adopting a borrowing bylaw that will give us access to the funds necessary to build this vital community amenity. Once all funding sources are factored in, we expect to be borrowing somewhere between $5 million and $8 million for a project that will cost about $10 million to complete; the best guess for a final borrowing amount at this point is somewhere around $6.3 million.
For a relatively small cost to the average household, we will have a high quality building that will serve the community for the next 50 years or more. In addition, we have made our best effort to ensure that the BC Ambulance service remains in Sidney for many years to come. Please see below for additional details.
General Information on Borrowing
- Borrowing bylaw will allow us to access up to $10M in funding to build CSB
- Final borrowing amount will be less than that:projected to be between $5M and $8M
- Borrowing term will be 30 years; about half the projected lifespan of the building
- Borrowing must be from the Municipal Finance Authority (MFA) which provides excellent rates
- Exact interest rates will not be known until borrowing locked in; estimated rates change daily.
How firm is the $10M building cost estimate?
- The $10M estimate was not just estimated by Town staff.
- To obtain the best possible estimate, the Town’s project architect obtained professional costing services from a construction company with extensive experience in building fire halls; we have a high degree of confidence in this estimate.
- Every year of delay could add 10% to the cost estimate, as construction activity picks up and availability of tradespeople decreases.
- Tendering process: We can never be sure of the price of construction until the project is tendered, and bids are received.The volume of construction activity will impact the bids.
- Changes to the BC Building Code may impose higher building standards, and add cost to the project.
What happens if the cost is projected to escalate?
- Once the borrowing bylaw is approved, our upper limit on borrowing for this project would be set; we may end up with a net borrowing closer to the higher end of the projection (i.e. $8M).
- We may be able to get more money from the sale of the existing site, which would help offset any cost escalation, or reduce the overall borrowing; our $2M estimate is conservative.
Impacts on Average Residence
The following tables outline a range of potential borrowing amounts, with associated payments. Also included in the tables are the projected impacts for the average residence, both in terms of a percentage-tax-increase-equivalent, and in dollars per year and month.
First 10 years of a 30-year term, using current 10-year interest rate of 2.34%:
Current estimate for full 30-year term, with projected interest rate of 3.15% over entire term:
Please note: Impacts for average residence based on the existing tax base only. Future tax revenue growth through commercial and residential development will reduce these impacts, as the new taxpayers will pick up a share of the cost over the long term.
Example of Net Borrowing Amount:
Q. If the project will cost $10M, why are we projecting a final borrowing amount less than that?
A. By the time the project is finished, we will have some offsetting funding. See below for illustration.
Amounts are estimates for illustration purposes only. Actual amounts will vary.