North Bay city debt hits $62 million

[Rick (Admin)]

North Bay city debt hits $62 million





The North Bay Taxpayers Association is raising the alarm over the city`s long-term debt, which – at nearly $62 million – has never been higher.

“The debt is out of control,” said association president Mark King, reacting to the figure presented to council Tuesday as part of an annual audit of the city's 2012 financial statements.

He pointed to a municipal study that compares the costs of some 80 communities, suggesting North Bay's debt per capita – about $1,148 – is more than two times that of other Northern communities. And King said he's concerned about what such a financial burden may mean for local taxpayers over the next few years, especially as interest rates rise.

Although the amount that's owed by the city is a concern, deputy mayor Sean Lawlor said there is not a debt crisis at city hall.

“We have to issue debt, there's no question,” he said, noting borrowing is required to help fund much-needed infrastructure upgrades and repairs.

Lawlor said the figure of nearly $62 million includes about $9.2 million that's still outstanding on the city's $20-million commitment toward the construction of the North Bay Regional Health Centre, as well as another $7.3 million related to the $40-million water filtration plant which was completed in 2010.

But he said the lion's share of the city's debt is directly related to borrowing to upgrade and repair infrastructure – a direction that the city first adopted about a decade ago in an effort to close the gap between what was getting replaced and what needed to be replaced.

Lawlor said the question – one that's debated each year during budget deliberations – is how aggressive should that plan be to close the gap.

The plan was ramped up in 2010, with city politicians agreeing to go deeper into debt over a decade – by as much as $80 million – in order to gain ground and get the city's infrastructure up to a sustainable level.

But Lawlor said council did make some adjustments to the plan this year including capping borrowing at $9 million annually under the capital budget, and at $3 million annually under the water and sewer capital budget.

“We're not blind to the fact that we have to be cautious when it comes to our debt,” he said.

With the changes adopted this year, the current plan – which is likely to be debated again this year – will see the city's long-term debt reach $70 million by 2020 before flatlining and then starting to decline.