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Grey Highlands debating source for $200k shortfall in Markdale Hospital funding

The municipality pledged $1.2 million for the hospital when construction begins, and currently has $1 million in a hospital reserve
2020_08_19 Grey Highlands highway sign_JG
Jennifer Golletz/CollingwoodToday

The Grey Highlands council is discussing ways to meet a $200k shortfall in funding for the soon-to-be constructed Markdale Hospital.

A resolution passed by a previous council pledged that the municipality would contribute $1.2 million to the hospital once construction began. 

There is currently $1 million in the municipality's hospital reserve, set aside in previous terms of council, but with construction anticipated to begin soon, council is debating where to source the additional $200k.

Mayor Paul McQueen said he was under the impression that the municipality would debenture the loan, but Grey Highlands CAO Karen Govan said that debenture isn't a great option.

"Debenturing something that we don't own is probably not a good use of borrowing," Govan said at the Nov. 24 budget deliberations. "Certainly, Infrastructure Ontario would not support that because there's no asset tied to it, so you would actually have to go to a bank and get a loan for that ... and perhaps you wouldn't realize good interest rates on that because there's nothing, there's no collateral behind that loan."

"I just find it frustrating that [in the past] we were told that we could debenture it," replied McQueen. "And now I'm hearing the point that we can't ... I just find it frustrating because we should have been setting aside, every budget year, so much money toward that commitment, and all of a sudden now $200k is a huge block of money."

Council discussed using fees that the municipality has waived, such as the $335k development charge that was never charged for the hospital, as an in-kind contribution to its construction.

"The Grey Highlands, specifically being the host community for the hospital, has missed out on a lot, with [a] $200k final payment [it] puts a half-million dollar burden on the residents of Grey Highlands," said Councillor Paul Allen. "So I'm thinking that the $335k [waived development charge] far outweighs the $200k that is remaining in our commitment, and then also there was some talk over the years about in-kind donation of servicing to do with water and sewers and things like that."

Councillor Cathy Little agreed with Allen's proposal for an in-kind contribution.

"We've paid for a good portion of it in cash, but I don't think the exemption of [development charges] should be ignored. That's a significant sum of money," she said.

Deputy Mayor Aakaash Desai argued that the contribution should come in cash, and should be applied to the 2022 tax levy, which would cause the levy to increase by over 1.5 per cent.

"My preference, obviously, would be that we give the $200k or the $1.2 million in cash to the hospital, and then they can choose how that money gets spent, and eventually some of it will come back into the municipality," he said. "Instead of trying to nickel and dime everyone on 'well, this is the in-kind' so that we don't have to put it on the levy."

"Should we have maybe put $100k last year and $100k this year? Sure, but none of us has a time machine to go back in time and make these arguments," he said.

Councillor Dane Nielsen suggested sourcing half of the money from the municipality's capital reserves, and the other from the tax levy.

"I do believe that taking $100k from the working capital is a fair way to do it," he said. "I think that that's a way we can still do the cash donation ... but also not affect the levy to the extent that the deputy mayor is discussing."

Council moved to defer the discussion to a later date.

The Grey Highlands budget is still in draft form and has not been approved by council.

The two remaining budget deliberations are scheduled to take place Nov. 29 and 30, from 9 a.m. to 4 p.m.

Council will meet again on Dec. 2 and Dec. 6 to ratify the budget.

All budget deliberations will be held virtually. Click here for the council meeting schedule and virtual links.

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About the Author: Greg McGrath-Goudie, LJI Reporter

Greg McGrath-Goudie covers The Blue Mountains and Grey Highlands as part of the Local Journalism Initiative, which is funded by the Government of Canada
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