RUSSELL TOWNSHIP — Council has chosen not to put the recreation complex’s roughly $70 million in long-term borrowing into one giant 30-year loan.
The strategy approved Aug. 31 spreads the debt among shorter and longer terms in an attempt to capture lower current rates while avoiding a single future refinancing date for the entire project.
Sébastien Dagenais, the Township’s director of corporate services and treasurer, called it “a balanced and prudent approach” that can give the Township more flexibility while reducing exposure to future interest-rate swings.
The plan includes $17.5 million on a five-year term with a 30-year amortization, $24.5 million on a 10-year term with a 30-year amortization, and the remaining long-term borrowing structured separately. Council also authorized an initial $17.5-million Infrastructure Ontario pre-flow loan.
Dagenais told council the comparison with a single long-term structure points to about $2.3 million in net interest savings during the first five years at current rates.
“The objective is to balance the opportunity presented by today’s lower short and medium term interest rate with the long term stability that taxpayers expect.” — Sébastien Dagenais, director of corporate services and treasurer
The Township moved before the meeting to preserve an approximately 3.67-per-cent rate for the initial pre-flow loan. Mayor Mike Tarnowski acknowledged the governance question that created, saying the rate was locked because waiting could have meant losing a favourable rate as markets moved.
Dagenais said Infrastructure Ontario’s pre-flow process normally takes six to eight weeks and requires the interest rate to be secured before council passes the final debenture bylaw. Council was told the early rate lock did not amount to approval of the whole $70-million package, although walking away from the secured financing could carry a penalty.
The discussion then turned to what the savings might look like over a decade. Councillors worked through scenarios in which total interest savings could approach $5 million over the first 10 years if refinancing conditions remain favourable. Those longer-term numbers are not guaranteed because nobody knows what rates will be when the five-year portion matures.
Coun. Charles Armstrong nevertheless supported the approach. “The short term interest rates will have to explode for us to lose some money on this,” he said. “I think it’s prudent.”
Another councillor praised the staff analysis, saying it “gave a great picture across the board” and “made the decision easy for me.”
For 2026, debt-servicing costs will come from the recreation-complex reserve. The proposed funding sources for 2027 and beyond are to return to council through the 2027 budget process.