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Town seeks extension to accessing $36 million line of credit for STP

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In New Tecumseth
Nov 5th, 2009
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New Tecumseth Free Press Online November 2, 2009
New Tecumseth council is expected to approve an amended deal with TD Canada Trust that extends by one year, the Town’s access to a $36 million “short term construction loan” helping to finance remediation and expansion of the regional sewage treatment plant.
The initial agreement was to expire in January 2010.
“Construction for the project commenced in the fall of 2007, has continued throughout 2008, will near completion by the end of 2009 and is expected to be fully complete by the spring of 2010,” according to a report by Mark Sirr, New Tecumseth’s Manager of Finance, on tonight’s committee of council agenda. “The expansion and remediation of the Regional Wastewater Treatment Plant is a partially Development Charge funded project. An amount of $36 million was determined to be the growth related portion of the project and as a result interest and principal payments that are incurred for any short or long-term financing of this project are funded by Wastewater Development Charges.”
Last December it was noted that “the majority of the project is eligible to be funded by DC’s but there are not sufficient DC’s on hand now to fund it. The short term loan will be replaced by a more permanent form of financing (eg. Debentures) once the project is completed and after utilizing any applicable DC’s received in the interim. The short term borrowing will be by means of BA’s and those rates fluctuate. The interest on the short term financing as outlined in the report is eligible to be funded by DC’s and thus will be charged to the capital project.”
One of TD’s 11 conditions or “Standard Positive Covenants” is that New Tecumseth “do all things necessary to maintain in good standing its existence as a municipality.”
At a most recent accounting of the Town’s debt obligations, there were six long term loans that cost $1.41 million annually to sevice, according to the application form. The maturity range is between 2010 and 2036.
The largest debt is the $11.59 million issued Sept. 1, 2006 at 5.54 per cent – presently only the interest payments of $642,372 are being made. That will grow in 2012 to just under $1 million when principle is added. The highest by interest rate is the 1993, $6.3 million debenture for the Alliston sewage plant, at 9.5 per cent. It matures in 2013 and costs $556,700 to service.

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