Quick Read

• Town looking for approval on an $8 million debenture and associated capital spending.
• Large projects(s) spanning multiple years will cost tax payers millions.  
• Servicing costs, interest, future capital spend, are expected to total $6.5 million over the next four years.  Not including any 2026 spend.   This servicing will continue well past the four years. This will come from your property taxes.
• Financial benefits not defined in the capital budget; multi-year tax increases are.
• East Fenwick development driving these capital, debt and future property tax increases.
• Voters/tax payers need transparency and communication from Mayor and Council.   This is largest increase in Town debt since the Meridian Centre over ten years ago.   Did we learn any lessons from the how the MCC funding and approval occurred?
• The Mayor and Council need to speak to this now before the election.
• A council vote to approve is expected soon,  This will likely commit the Town and tax payers to multiyear tax increases.
  

In our 2026 Capital budget approved earlier this year by the Mayor and Council is a large debenture issuance for $8 million dollars.   Our debt situation must be healthy for the Mayor to even consider adding to it.   Looks like he and council want to spend some megabucks.   Let’s look at a small part of the Town’s Approved 2026 Capital budget.  If you want to follow along here is a link to the document.  Link to Town capital budget

We will start on page 7.  The 2026 Capital Budget Summary.

Here is the Mayor’s $43.2 million capital budget which he refers.  Of the $43.2 million, $4.6 million is being funded from developer fees.   $21.1 million from grants (comes with strings). The Mayor did hire the right people to solicit and get sizeable grants.  The strings are the Town has to fund  $16.9 million.   Of this $16.9 million $8.9 million will come from reserves (previous years taxes) and 2026 property taxes.  The remaining $8 million will come from the Town issuing new debt.   These are only the 2026 portion.   There is likely future capital spending and debt issuances that will be required.  

When you issue debt, it has to be repaid, with interest.  On page 203 there is a brief, but impactful, schedule on future payments of principal and interest.    Interest payments actually increase going out to the year 2030.   Must be because the Town will need to borrow more funds in 2029 I guess.  That future borrowing will be unavoidable if we start into this project, looks like it will be an additional $8 million.  

The numbers on this schedule, from the Town budget, are set up as increments to the previous year.  They look smaller that way.  I have created a clearer table showing the total property tax levy increase from reserves and the tax levy increase from debt payments.

This table shows the annual payments to service this new debt.   

This is only showing out to 2030. These extra property taxes will contune past 2030.   Hopefully there will be increases in assessment, after 2030,  which will allow the Town to increase its tax revenue and pay down the debt and eventually, someday, provide a financial benefit to all of Pelham.  

The Mayor, Council and Town staff are considering locking Pelham into a very sizeable financial commitment.  A commitment that will require atleast $6.4 million dollars of additional property taxes over the next four years.  This does not include paying back the debt principle which will be at least $8 million plus.

My understanding is the driver behind all this is coming to council for a vote of approval quite soon.  This will be the most critical single financial decision our council has made in the last 10 years.  If council approves, it will put Pelham on a financial course which will have impacts for a decade or more to come.

The entire breadth of the financial projections need to be reviewed by council and shared with the public.   The Mayor needs to sell the Town residents as to why it should be approved and to do that faithfully it needs an airing of the monies involved.

Pelham voters are entitled to transparency and clear communication in advance of the election.  Tax payers need to see a multiple year cash flow presentation so the public can see what and when spending will occur and how long it will be until the debt will be retired and the financial benefits associated with this start rolling in.

I believe the core endeavour behind these numbers is the East Fenwick development project.   I will talk about East Fenwick in a separate post.