$80m Facility, Without A Tax Increase

How do you build an eighty million dollar facility with out having to increase taxes to pay for it?

That's exactly what council will be discussing at 9:30 this morning; how do we build the Aquatics Centre and what will the impact be on the tax paying homes and businesses in the city?

Here's the details that are in the staff report to council...

Cost
$80m (The full Aquatics Centre, with the first portion of the fieldhouse)

Funding
$2.825m
Aquatics Reserve (Money we've been saving up for this project)
$1.110m
Aquatera dividend (from our Shares in Aquatera for 2008, 09, 10)
$1.8m
2006 Profit from Growth in the Tax Base (2008, 09, 10)
$5.8m
2006 Profit from Growth in the Tax Base (2009, 10 - in previous years was going to Library/Gallery)
$1.8m
2007 Profit from Growth in the Tax Base (2008, 09, 10)
$6.4m
Contributions from businesses, other municipalities & fundraising
$6.0m
2008 Municipal Sustainability Initiative funding
$7.2m
2009 Municipal Sustainability Initiative funding
$8.2m
2010 Municipal Sustainability Initiative funding

$41.135m Sub-Total

$39m Borrowing (Also called debt, or "the mortgage")

$80m Total

I know the picture isn't all that clear just looking at the chart. I know I still had some questions so I'll try to answer some of them in case you are asking yourself the same thing.

How much are the payments on that $39 mortgage? You'll have to increase taxes to make the payments won't you?

Well, no actually. The debt servicing (the mortgage payments if you like) are $3.1m per year over 20 years. The Profit from Growth in the Tax Base and the Aquatera dividend that we used above for construction come to $4.47 million per year. After construction is done in late 2010 we can use those moines to pay the mortgage and still have $1.37 million left over.

Ok, what about how much it cost to operate the building? I heard the Leisure Centre looses money and this Aquatics Centre is even bigger and more expensive to run so it will cost more. You'll have to increase taxes to pay for that loss won't you?

Actually the business plan for the building says that it will run at a loss of $1.31 million in the first year (that's the same as it costs to run the Leisure Centre), in the second it will improve and only cost $948,500 and in the third year it's practically break-even at $36,950. So, we can use that left over $1.37 million from above to off-set the operating losses in the first few years. The estimates of memberships sales we are building this on are pretty conservative in my opinion (3500 sold in the first year and through presales then 5150 in the second, 6890 in the third and 8190 in the fourth year).


The meeting is starting in a few minutes, I'll have to finish up later.....