CITY MAKES MOVE TO HANDLE ITS DEBT
(as published by the Daily Gleaner, Saturday, October 2/10)

The next batch of city debt will be sold via the New Brunswick Municipal Finance Corp.The city applied Friday to the provincial government agency, which helps municipalities in the province market their debt in the financial markets, to sell debentures to lenders willing to back the city's debt.

"There's probably one small borrowing left after that," O'Brien said. "That includes all the funding for the $42-million office complex which we do recover through the rent."

The city is financing a new downtown office building for the provincial government, but the province's lease payments will see the city reimbursed for the total cost of the project, O'Brien said.

Once the city collects the construction cost of the office complex through the 20-year lease deal with the province, it will have recovered its $42 million investment, O'Brien said.

That will bring the city's overall debt for major capital projects down to $78 million. The city has already received approval from the Municipal Finance Corp. to borrow nearly $34.8 million. That includes $18,825,000 for its downtown east-end convention centre project, another $8,675,000 for its new parking garage alongside the convention centre and $7.3 million for the north side fire station.

The next lump of debt to be financed is: $7,992,984 for the convention centre; $2,507,016 for the parking garage; and $500,000 for the north side fire station, for a total borrowing of $11 million.

O'Brien said there will be a slight delay in receiving the tenders for the construction of the Grant * Harvey Centre. Bidders have asked for an extra week to prepare and submit prices. "The prices will still be coming in and assuming that somebody comes in within budget, that will be coming to the last council meeting in October," the finance committee chairman said.
The city is continuing to work on its 2011 operating and general fund budget.

A new expense that will have to be worked into the budget plan is operating funds for the downtown convention centre. O'Brien said the city is expecting the convention centre will run deficit budgets during its early years. "The ideal situation is for it to almost break even," O'Brien said. "Like any other business, it takes a time for it to ramp up."

O'Brien said the city takes a loss on the operation of some facilities because of the community economic or cultural benefits that are derived.
The city-owned The Playhouse, for instance, isn't a money-making venture for the city, but benefits the city.

"If we do it right and market it right, the way I look at it, if you had a choice to have a convention somewhere in New Brunswick, why wouldn't you want to come to Fredericton?" O'Brien said. "If it breaks even that would be beautiful because the economic spinoffs to the community will be phenomenal."