The following FAQ provides a summary of questions received by Township staff following the publication of the Validation Report.
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The report mentions (on page 98) $1,135,908 in Renewable Energy Benefit funds. Can we obtain a breakdown of this number including which funds are included? |
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Upon further review, staff has found that some of the approved funding had not yet been transferred, making the actual total of unspent Renewable Energy Benefit funds $860,257 The breakdown of these funds is Ward 1 - $104,626 and Ward 2/3 - $755,631. The reduction from $1,135,908 to $860,257 results in a calculated General Rate Tax Levy impact of 1.06% instead of the originally reported 0.96%. If none of the unspent funds were used, the calculated impact is 1.35%. |
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Please advise what the total existing Township debt (General Rate and Utilities) debt is currently and what new debt (general rate unfinanced capital outlay) and any other new debt is proposed in the 2024 budget. In 2021 the grand total was $18.459M. How does this compare to the amount proposed in 2024? Exactly what will the Township pay in debt servicing in the proposed 2024 budget? How does this compare to the debt ceiling guidelines for Ontario municipalities? |
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The Township’s total debt is summarized in the following table. It should be noted that the 2023 budget includes an extraordinary payment of $4.6 million to pay down a loan incurred in 2022 in the amount of $22.6 million to $18 million, funded from proceeds of sale of Industrial Lands. The 2024 Budget is still under development and firm numbers for anticipated debt issue in 2024 are not yet available.  The 2024 budget is still being developed and as such firm numbers for 2024 debt servicing are not yet available. Preliminary information reflects an amount of $1,188,000 for the 2024 budget as debt service costs (principal and interest). The significant reduction from the 2023 amount is due to an early retirement of a portion of the loan incurred in 2022 for purpose of industrial land redevelopment as described on page 19 of the 2023 budget. This loan has been refinanced in 2023 and is currently being carried on an interest free basis with repayments to start in 2027. Relative to debt ceiling guidelines for Ontario Municipalities, municipal treasurers are required to calculate an annual debt repayment limit before new debt can be issued. This is calculated as part of the Financial Information Return (FIR) using the Provincial formula. The most recent FIR available is for the 2022 fiscal year end. The calculation considers total municipal revenues, less specific items such as grants, development charges etc. and allows 25% of net revenues towards debt service costs. Based on the amounts reported for 2022, there is a further capacity of $7.3 million of debt service costs that can be funded from municipal operations. The 2023 budget detailed Township-wide existing debt repayments as a percentage of own-sourced revenue at 4%, which represents 16% of the Annual Repayment Limit. The following is an excerpt from the March 27, 2023 Report to Council on 2023 Debt Capacity SR 2293 “Based on estimates provided in the attached report, the Township may borrow an additional $85.8 million before reaching its 2023 ARL, however, municipalities tend generally to avoid reaching their limits to ensure a sustainable and balanced portfolio of debt, reserve funds, property tax revenue, and other sources of revenue to fund their operating and capital budgets” Based on the 2022 FIR, the cost of servicing debt per household can be calculated as follows.
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| What was the purpose of the recommendation to use the surplus funds from the Vibrancy Fund? |
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The purpose of the recommendation to use the surplus funds from the Vibrancy Fund was to present Council with all the different sources of revenue which can be used to fund the W.J. Henderson Recreation Centre, along with the subsequent projected impact to the General Tax Rate. For example, the report outlines that impact of an unsuccessful grant application in the amount of $1.25 million would necessitate a further 0.4% increase to the General Tax Rate. A similar calculation outlining the increment increase to the General Tax Rate should Council decide not to use the surplus Vibrancy Funds will also be provided to Council. |
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The chart on page 109 is one view which entangles capital and operational numbers, stating an annual amount to be funded of ~$188K. Hoping staff could also provide a couple of other views of the numbers:
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The chart on page 109 represents the net annual cost of the building and operating the proposed facility once debt repayment, operating expenses/revenues, and other annual cost have been accounted for. Deferred capital costs refer to the annual contributions to capital from operating that would be required should the project not move forward (i.e. if the project does not move forward, an average of $450,000 per year will be needed over the next ten years to keep the facility operating in its current state). Comparing the costs of operating the proposed facility (go scenario) to the costs of continuing the existing facility as is (no-go) is difficult since different options can be considered, each with their own costs. For example, decommissioning the existing pool and only operating the facility as an arena would be different than converting the existing pool hall into a multipurpose room. The closest comparison would be to use the 2023 budget to operate the existing facility and remove all aquatic expenses and revenues (the Township is still running aquatic programming out of other pools in the area). This information is summarized in the Table below (although it should be noted that 2026 no-go scenario does not account for inflation between 2023 and 2026, whereas the 2026 scenario does account for inflation.
*The 2026 no-go arena revenues are less than 2019 for a number of reasons including the removal of vending machines, how facility free-use was tracked as revenue in 2019 and more specifically that ice rates have not increased post COVID. As noted in 7.4.1 Arena Revenues, rates at the W.J. Henderson Recreation Centre arena are among some of the highest in the region. It should be noted that the no-go scenario presented above only represents operating expenses and revenues of operating the facility as an arena. Capital costs would be required to properly decommission the pool. The option of converting the existing pool into multipurpose space could also be considered, however this would require additional capital costs as well as additional operating costs to program the new space. |
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Of the overall annual debt service cost of $549K, approximately how much of that is attributable to aquatics? |
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It is a bit difficult to answer this question. The project costs presented in the validation report consider the facility as a whole instead of looking at it as an arena, an aquatic facility, and a community space. This approach is more efficient in terms of costs and use of space. For example, moving the existing aquatic change rooms to the old pool location frees up space in the atrium. More importantly, designing the mechanical systems of the building to complement each other, rather than working independently, is much more efficient since it allows for waste heat to be captured and re-used. The question is made a bit more complicated when considering the sources of funding. For example, the GICB grant will provide $16.55 million towards the entire project, while the City of Kingston contribution is only towards the new aquatic facility. The $549k annual debt service figure represents the debt needed to fund the project once the project costs and sources of one-time revenues have been considered in their entirety. As such, separating out the aquatic figures is not possible. |
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Is there an estimated cost to maintain the existing pool area if the project does not advance? |
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We do not have a cost for maintaining the pool area. Currently, that section of the building sits empty and does not cost much to maintain, but this would not be the case over the long term. |
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Is there an estimated cost to demolish the existing pool area if the project does not advance? |
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We do not have an estimate of the costs associated with decommissioning the existing pool. These would depend on the scope of work. For example, the cost of infilling the existing pool basin and repurposing the space would be vastly different from demolishing that section of the building in its entirety. An order of magnitude estimate would range between $1 to $5 million. |
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The unknown potential expenses (risk register I think) such as investigating the structure integrity of the existing pool footing and possible need for repairs included in the 3 million? It appears the items in Section 6.1 are included. |
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Yes, the risk register represents the combined costs of all of the unknowns which might arise. The examples provided on page 79 are just a few of the risks that make up the register (which is the table that spans pages 80 t0 85). As the project advances, some risks will get “retired” once the project team is comfortable that they have been mitigated, and a portion of the value (between 50% and 75%) goes back to the owner who can choose to re-invest it in the project or keep the savings. |
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If the vibrancy fund is not utilized what would the tax increase be? |
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Not utilizing the vibrancy fund surplus would necessitate a further incremental increase to the general rate of about 0.4%. |
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How is the 19 million federal and 6.5 million Kingston funds play into he cost? Is the actual cost 49.5 – 25.5 million or 49+25.5? |
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The actual cost is $49.5 million, and all of the sources of 1 time revenue presented in Section 7.2 would be applied against the $49.5 million. |
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If the project is completed and the reduction in energy is realized as laid out in the report, what financial saving would that be to the twp? |
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The expanded facility would use less energy on a per area basis than the existing facility but when comparing actual overall use they would both use a similar amount of energy. This, in addition to the fact that the building system is being electrified, will actually result in a higher annual energy bill (the cost of a kilowatt of energy generated from electricity is higher than the cost per kilowatt from natural gas) in the short term. That said, it is projected that natural gas prices will increase at a faster rate than electricity prices, so the gap will become smaller over time. The projected increase in carbon tax will also help reduce the gap further. Based on these projections, the cumulative energy costs over the lifespan of the facility are projected to be roughly similar, but for the first 5 to 10 years, the proposed facility will be more expensive to operate in terms of energy costs. |
| What happens to the physical plant of the pool area if the project doesn't go ahead? |
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There are several options for the existing pool building that would be available for Council’s consideration. For example, the basin could be infilled to allow for the hall to be converted into multipurpose space. This would require a fair amount of capital work as well as increased operating costs to staff the facility in a way that would allow the space to be used for programming. Alternatively, Council could choose to demolish that section of the building altogether and only offer arena programming at the facility. The resulting facility would be operated in a similar manner as it has been since 2021, with minimal programming occurring during the off-ice season. Offering floor programming in the summer months could be an option but this would require additional staffing as well. We can not provide reasonable estimates on any of the options above at this time since the scope of the validation report was strictly to investigate the cost of the proposed facility. |
| What does the projected tax rate increase in terms of cost per household? |
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Based on the 2023 budget, a 1% tax increase for the median static assessment value represents increase of $21.45 annually, or $1.79 per month. |
| What was the cost of the original W.J. Henderson Centre and the Township budget then? |
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The cost of the original facility constructed in 1975 was $1.9 million with intergovernmental funding as follows:
Land donated by W.J. Henderson and the L&A School Board |
| What explains the administrative staff savings of $289K between 2019 and 'go' 2026? Why is that savings then annualized for each of the 30 years of the loan in the chart on page 109 as part of the $780K for staffing? |
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The lower administrative staffing costs is due to a restructuring of management in the recreation division in 2019. Due to this restructuring, staffing budgets for management positions which used to be exclusive to the recreation division were instead partially re-allocated to other divisions, resulting in a lower cost in this item. The net annual staffing costs associated with the facility are projected to increase by $780k, and this difference has been incorporated into the net annual costs associated with the project. |
| What was the capital cost of $246K in 2019 for? Why is that 2019 vs 2026 capital savings then annualized for each of the 30 years of the loan in the chart on page 109 as part of the ($96K) for general costs? |
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The capital costs of $246k (broken down as $66.6k for rec services, $115k for the arena, $65k for the pool), represented a contribution from the operating budget to the capital budget. The 2019 operating budget included the following write-up “Significant Investments in 2019 will be made to the arena which include upgrades to the dehumidification system, the header pipes for the ice system, a portion of the rink boards, and the roof over the compressor room. Some continued replacements are required to critical components of the Dectron HVAC unit that controls the air quality in the pool. Various accessibility features will also be added to washrooms at the Recreation Centre”. The difference in general costs being a net savings of $97k are projected to have a continuing annual impact on a go forward basis. |
| The $450K subtraction for foregone capital expenditures (based on needing to spend 4.5M over the next 10 years on the building even if 'no go'), is this $450K/year funded within the current tax rate? If no, should it be included as part of the required increase in the tax levy for the project or when would we increase the tax rate to cover it? If yes, the 10 years of 450K/year is already funded in the current tax rate, should the $450K be subtracted from each year of the 30 year annual debt service cost of $549K/year or only from the first 10 years? |
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The $4.5M over 10 years has been annualized to $450k per year, and given that, it does apply only to the first 10 years. The capital expenditures totaling $4.5 million are not reflected in recent capital budgets due to the include of the project instead ($2.5 million for 2023 including carry forward). Funding for this cost has been by either general capital reserve fund, future debt, grants, or funded by a contribution from the operating budget. |
| Are dressing rooms 2 through 5 undertaking a refurbishment in this plan? |
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Large scale renovations are not planned for dressing rooms 2 through 5 however some minor work will be completed, specifically the replacement of the rubber flooring. The HVAC for the dressing rooms will also be upgraded as part of the project. Finally, the Township’s facilities team will repaint the rooms as part of operating activities. |
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The electrical and mechanical cost estimates for extras seem out to lunch. If we approve any of those items are we getting a firm number before we start? |
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The electrical and mechanical costs were provided by Modern Niagara, who is the trade partner responsible for this portion of the work. The pricing they have provided is accurate and has been refined over the course of validation. It should be noted that the numbers are on the higher side since the majority of the mechanical systems in the facility are approaching the end of their useful lives and need to be replaced. |
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