Township of Blandford-Blenheim Council approved a ten-year funding strategy for two significant capital projects during the regular Council meeting on Wednesday, June 3, 2026.
With the new Princeton Fire Hall almost complete, and a new aerial fire truck on the way, Director of Finance Denise Krug explained that it was time to determine the most appropriate debenture term to finance the capital costs.
According to Krug’s report, the construction of the new fire hall is costing $3 million in total, and the purchase of an aerial fire truck costs $2.034 million.
“Staff recommend that net proceeds from the sale of the existing fire hall, anticipated to close in July 2026, be allocated to the Fire Reserve to offset the cost of the new facility,” she said. “Consistent with prior budget approvals, the Township plans to finance portions of both projects through debentures, including $2,000,000 for the fire hall and $1,000,000 for the aerial truck.”
The report went on to say that it was up to Council to determine if either a ten- or 20-year debenture term was most appropriate, and to weigh the impact on the tax levy against long-term interest costs, while maintaining alignment with the Township’s Debt Management Policy.
“The Township’s Debt Management Policy states that a ten-year financing term is generally considered financially prudent, while allowing for longer terms based on project characteristics, market conditions, and competing infrastructure priorities,” the report stated. “Both the fire hall and aerial truck qualify for development charge funding, which will be used progressively to offset debt servicing costs as revenues are collected.”
Krug told Council that while they might prefer to stick with the ten-year term, assets with a longer lifespan (such as the fire hall) could be debentured over a longer period of time if Council decided to do so.
“I did provide the dollar figures showing it is a slightly higher interest rate with the longer term; the difference in the interest that we would pay between the ten-year and the 20-year debentures is over half a million dollars more if we debentured over the 20 years,” she said. “It does mean an increase in the size of the payments. They are development charge [DC] eligible, so some of those payments will be coming from DCs if we collect them. Hopefully, we get some building going on so we can collect some DCs, but it is my recommendation that we debenture both projects for ten years.”
Councillor Nancy Demarest, noting that the report indicated a 1.2 per cent differential impact on the tax levy when going with the ten-year term, asked Krug to explain how the math would work.
The treasurer said that if Council opted for the 20-year term, next year’s debenture payment would be $661,000, compared to roughly $750,000 under the ten-year term.
“So the $88,000 difference is about 1.2 per cent on the levy,” said Krug.
Demarest later said that she believed that it made more sense to go with the ten-year option for both.
“Typically, with an asset that lasts as long as it does, you try to match up the debt repayment with the useful life of the asset,” she said. “You do that in a municipal environment to ensure that the financing cost is spread over the people that are going to use it – whoever uses it, pays for it. That’s kind of the principle. The exception to that is if you can manage the debt, and not every municipality can, but because we don’t carry much debt and even with these borrowings, we’re still well under the threshold. It does make sense in this particular case to do the tenure for both.”
Krug added, “Also, with the development charge portion of it, they will spread it out so that we will continue collecting DCs to help pay for that. It won’t just be the DCs that are collected in the next ten years. There will be a future payment that is calculated as well, so that they will continue to pay for that.”
Mayor Mark Peterson also agreed that it made sense to go with the ten-year term.
“I know trucks have a life expectancy of 20 to 25 years, but I still think it makes sense to do ten years with the money we’ll save over that time,” he said. “And with us not having any debt makes a big, big difference.”
Council later received the report for information and authorized staff to submit applications for a ten-year debenture term for both capital projects.
Kimberly De Jong’s reporting is funded by the Canadian government through its Local Journalism Initiative.The funding allows her to report rural and agricultural stories from Blandford-Blenheim and Brant County. Reach her at kimberly.dejong@brantbeacon.ca.
