MUNICIPALITY OF CHATHAM-KENT CORPORATE SERVICES FINANCIAL SERVICES. Temporary Financing Active Lifestyle Centre Project

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1 MUNICIPALITY OF CHATHAM-KENT CORPORATE SERVICES FINANCIAL SERVICES TO: FROM: Mayor and Members of Council Gord Quinton, BA, CGA Acting Director, Financial Services/Treasurer DATE: September 10, 2013 SUBJECT: Temporary Financing Active Lifestyle Centre Project RECOMMENDATIONS It is recommended that: 1. An interest free temporary bridge loan of up to $150,000 be advanced to the Active Lifestyle Centre in Chatham to allow the completion of its Building Expansion Project under the Federal Community Infrastructure Initiative Funding program. 2. The Executive Director of the Active Lifestyle Centre submit financial information to the Municipal Treasurer to provide oversight to the expenditures. BACKGROUND The Active Lifestyle Centre (ALC) has recently seen a large increase in membership and was in need of more space at its municipally owned facility at 20 Merritt Ave. in Chatham. Seeing the need for expansion, the Board began to set aside funds to finance a 25% expansion to the facility. In August 2012, a grant application to the Federal Government for the Community Infrastructure Initiative Funding program was submitted and was subsequently approved. The $709,000 project was 50% funded by the Federal Government, with the remainder being paid by member and other donations. No municipal tax dollars were requested for this project. The ALC has asked the Municipality to assist with a temporary bridge loan of up to $150,000 to allow them to complete the expansion to allow a final completion report to be submitted under the grant program (refer to Attachment A). By Federal funding regulations, it does not pay its commitments until proof of the expenditures are made, and holds back 10% of the funding until the project is 100% complete. In addition, HST rebates are filed annually by ALC, and HST rebates on the construction will not be received until June There are also some committed donations being collected over time. The ALC does not have the ability to front the final construction payments. ALC s bank will not provide a loan as there is no collateral, as the Municipality of Chatham-Kent

2 Temporary Financing Active Lifestyle Centre 2 owns the building. A bridge financing loan would enable the project to be completed on budget and on time and would allow final expense claim forms to be forwarded to the Federal Government for final grant payments to be processed. COMMENTS Chatham-Kent has received the benefit of the betterment of its own facility with no tax dollars required. By providing an interest free temporary bridge loan, Council will enable the completion of the project. The funds are needed progressively beginning in October 2013 until grant funds, donations and an HST rebate are received by June The project is currently 88% complete and on budget. Final construction will wrap up by November 30, 2013 with a planned grand opening in February Final Federal grant forms will be submitted upon final completion, with the expected receipt of funds approximately 90 to 120 days later. Once funding is received, the ALC will immediately repay the Municipality. It is administration s opinion that there is minimal risk of default on this loan. The Federal Government has verified to administration that it has budgeted for the remainder of the grant for this project and that payment will be promptly made as final claims are submitted. COMMUNITY STRATEGIC PLAN The recommendations in this report support the following Council Directions: Healthy, Active Citizens Growth Through Variety of Post-Secondary Institutions High Quality Environment Through Innovation Destination Chatham-Kent! Magnet for Sustainable Growth Prosperous and Thriving Community Has the potential to support all Council Directions Neutral issues (does not support negatively or positively CONSULTATION The Executive Director of the ALC provided information included in this report.

3 Temporary Financing Active Lifestyle Centre 3 FINANCIAL IMPLICATIONS There is a nominal reduction in interest income to the Municipality as a result of this report. The ALC hopes that continued fundraising efforts will lessen the need for the entire $150,000. The funds will be advanced by $25,000 installments as the Executive Director provides evidence of expenses to the municipal Treasurer. When funding is received, the loan will be immediately repaid. Prepared by: Reviewed by: Gord Quinton, BA, CGA Acting Director, Financial Services/Treasurer Gerry Wolting, B.Math, CPA, CA General Manager, Corporate Services Attachments: Attachment A Request from ALC c: Sue Williams, Executive Director, Active Lifestyle Centre P:\RTC\F&PS\Finance\2013\RTC019 - Temporary Financing - Active Lifestyle Centre Project.docx

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