City will need to borrow $18.8 million for operations building

As Whitehorse City Council gets closer to deciding whether to approve money for the new operations building, councillors now have a better sense of how the project will be funded.

As Whitehorse City Council gets closer to deciding whether to approve money for the new operations building, councillors now have a better sense of how the project will be funded.

The $45.6-million building will be paid for with $11.6 million from the city reserves, $15.2 million in federal gas tax money, and $18.8 million borrowed from the bank, Valerie Braga, the city’s manager of financial services, told council Monday.

Braga presented a six-page financial report at the meeting. Council is slated to vote on the city’s 2017 capital budget, which contains the majority of the funds for the new operations building, next month.

“Funding for the operations building component as proposed has been financially planned for,” Braga said.

“An allowance has been made within the annual capital spending limits to pay the debt servicing costs and the project financing is not anticipated to cause any financial distress to the city.”

Paying off the debt is expected to cost the city no more than $1.5 million a year, she said.

That’s based on an expected five per cent borrowing rate, though the city has not been approved by a bank yet.

Unlike some conventional mortgages where rates could be lower but need to be renewed every few years, the city’s borrowing policy requires that it gets locked into a 20-year fixed rate mortgage, Braga said.

The plan is to eventually put out a request for proposals to see what rates are available, she said.

Braga’s report is the first time the city has publicly said how much debt it expects to take on to build the new operations building.

Other key numbers are still unknown.

“I do remain extremely concerned about the operating costs,” Coun. Dan Boyd said.

City staff have maintained that the operating cost for the new building won’t be known until the design is complete.

The new operations building will be bigger than the 50-year-old municipal services building and others it’s replacing, said Peter O’Blenes, the city’s director of infrastructure and operations.

Improved efficiencies means the energy costs will be lower per square metre than the old buildings but the total cost isn’t known yet, he said.

The old buildings cost about $500,000 a year to operate, said O’Blenes, if you include the amount of money that gets put into repairs.

A few members of council used their time questioning Braga to drop not-so-subtle hints reiterating where they stand on plans for the operations building.

Mayor Dan Curtis, who has been vocal in his support of the new building, confirmed if the city were to scrap the project and rent space for staff there would be no federal money to help cover those costs.

Boyd, who has expressed concerns about the project, later confirmed with Braga that gas tax money is not lost to the city if it doesn’t get spent on this building. It could be used for other things.

If it gets built, the new operations building won’t fit everyone. After being questioned by Coun. Rob Fendrick, O’Blene confirmed about 34 people won’t have an office when the new building opens.

Space will have to be leased for them over the next two or three years, he said, until the city’s new services building is built.

That building is expected to cost about $9.9 million, council heard. It’s expected to be completely funded with federal money through the Build Canada Fund.

Money for the services building is part of the city’s 2018, 2019 and 2020 budget projections.

The city has set aside about $197,000 a year between 2018 and 2020 to lease extra office space, according to budget documents.

Contact Ashley Joannou at

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