Monday night (Jan. 13) town council gave first reading to the debenture bylaw that will set in motion the town’s transit hub/innovation centre on Railway Street.
The debenture borrowing would be for a term of 30 years with a current interest rate of 2.67 per cent through the Alberta Capital Finance Authority.
Principal and interest payments on the $4.4 million borrowing, at the current rate, are estimated to be $214,150 per year. It’s anticipated that rental revenues generated by the innovation centre will cover principal and interest payments and there will be no impact to tax payers.
“We can’t go ahead with construction unless we have the borrowing,” said Katherine Van Keimpema, senior manager of corporate services. Van Keimpema added that this is a model form of borrowing.
“Repayment of this debt will not be funded by tax dollars, it will be funded from the rental revenue that’s anticipated from the rental property component of the building that will be constructed with these funds.”
“It makes sense to borrow funds when you have a non-tax source that could fund the payment back.”
The project has been underway since being identified as part of the tri-site concept plan in 2018. Council approved the business plan in September, 2019. In December, council approved moving ahead with a request for proposal (RFP) process to begin building with detailed design and costing for construction.
Construction costs, including on-site servicing, are estimated at $10 million.
The project is scheduled to be built at the same time as the $2 million CP Rail pedestrian crossing included in the town’s 2020-2022 budget. The crossing will be funded by the Community Revitalization Levy.
About half of the total - $4.6 million - will come from the provincial GreenTRIP funding and a $1.5 million MSI capital grant for the incubator and innovation space. The remainder will be borrowed.
The town hopes to lease 21,865 sq-ft of the 39,275 sq-ft space at commercial rates. The funds generated by leasing will support the incubator space for early stage start-up companies. The town predicts that after generating commercial lease revenue and paying associated costs of running the facility, the net operating income is estimated at $125,902. Financial figures will be refined as plans are finalized.
Councillor Alex Reed was eager to give the project the green light and put a motion on the floor for the borrowing. He said the project was positive in a financial sense and added to the overall vision for Cochrane.
“This is a great project that we need to support to move forward,” he said.
Town administration will advertise the borrowing bylaw in the Cochrane Eagle on Jan. 16 and Jan. 23. The public has the option, within 15 days from the date of the last publication of the notice, to petition council on the borrowing bylaw. Administration will return to council for second and third readings of the bylaw.
Van Keimpema said that because Cochrane is borrowing as a municipality, and not as an individual, the interest rate will not change during the 30 year term. Borrowing would occur this year and the interest rate will be finalized.
The final reading of the bylaw is expected to take place Feb. 10. The go ahead on the build will be given 30 days after that date.
It’s hoped that construction will begin this spring.