A year after construction began on the Martensville Recreation Centre (MRC), the project remains on schedule and is expected to be in operation by this fall.
But, the price tag, originally pegged at $44.5 million, only included the design and construction of the facility and did not factor in other related project costs.
Now costs have risen to about $58.255 million as a result of inflation and the addition of equipment and fixtures, and servicing, not included in the original estimate used for the grant application.
Two months ago, as part of its overall 2024 civic budget, Martensville City Council approved an $18.17 million loan amount for the MRC, aimed at making up the shortfall between the $39.8 million the city currently has on hand in available funding and the $58.255 million in total projected costs.
According to a report from the city administration to the April 5 Martensville City Council committee of the whole meeting, the city’s current $39.8 million kitty holds $32.664 million in grant funding; $6.166 million in reserves (including past donations and levies); $584,000 in expected recreation levies to be collected in 2024; and $425,000 in donations this year from the volunteer-based Martensville Community Recreation Project (MCRP).
The report also states the updated $58.255 million MRC project costs include: $52.6 million for construction and design; $3.25 million for servicing; $1.3 million for furniture, fixtures and equipment; $500,000 for the paved parking lot; $500,000 for landscaping; and $105,000 in interest payments on short-term debt.
The report to the April 5 city council meeting indicated the civic administration is looking to borrow $17 million from the provincially-owned Municipal Financing Corporation (MFC).
“As the project continues and we near the end of our grant allocation, Administration would like to secure most of the loan financing with the Municipal Financing Corporation to ensure we will not be over-utilizing operating funds or the construction line of credit,” stated the report. “As of March 31, we have made claims for 71.98% of the approved claim amount.”
The city administration intends to re-evaluate the funding shortfall prior to year-end once the project expenses and income from donations are finalized. If an additional loan is needed at that time it will be brought to council. In addition, council could also be asked later this year to approve an increase in the city’s debt limit to ensure it has the financial capacity to handle potential additional loans for the MRC and its ongoing water and wastewater project with Saskatoon.
But, in the meantime, Martensville city councillors are currently pondering the terms of the proposed $17 million loan needed this spring. Four options were put forward in the administration report to council.
Two of the proposed options were based on the premise that additional revenue from property taxes or the recreational levy was required.
The options include:
*A 30-year loan at 4.65%, with annual payments of $1,062,149.30 and total interest charges of $14,864,478.83 over the life of the loan; no increase in property taxes or the recreational levy was required;
*A 25-year loan at 4.75% with annual payments of $1,176,147.14 and total interest charges of $11,650,427.75 over the life of the loan; no increase in property taxes or the recreational levy was required;
*A 20-year loan at 4.75% with annual payments of $1,335,357.94 and total interest charges of $9,707,158.91 over the life of the loan; an increase in property taxes or the recreational levy would be required;
*A 15-year loan at 4.70% with annual payments of $1,604,775.51 and total interest charges of $7,071,632.59 over the life of the loan; an increase in property taxes or the recreational levy would be required.
Council is expected to make a decision on its preferred option at an upcoming meeting in May, although the decision could also be deferred a few weeks longer if needed.
During discussion on the various options at the April 9 council meeting, most councillors leaned toward the 20-year or 25-year loan periods.
Councillors were also reluctant to look at any increases in property taxes tor the dedicated recreation levy to offset the expected costs of the loan.
“I would definitely prefer options that don’t include any increase in the recreation levy,” said Martensville City Councillor Spencer Nikkel.
Councillor Darren MacDonald ssaid he preferred a shorter-term loan.
“The prospect of locking into a longer, 30 year term at a higher rate doesn’t appeal to me,” said MacDonald.
“I’d lean toward a 15 or 20-year term. Our current rink was built in 1987 and, if it had been financed over 20 years, it would have only been finally paid off just eight years ago.”
Martensville Mayor Kent Muench said during the council meeting he thought a 20-year loan term offered a “manageable risk” that the city could handle.