‘Quick payback’ to replenish depleted fund, treasurer says
By Richard Leitner, News Staff
The Hamilton-Wentworth District School Board is set to wipe out $17.2 million in cash reserves to pay for the new Education Centre at the Crestwood school site near Lime Ridge Mall.
Treasurer Don Grant said the move is necessary because the Ministry of Education won’t let the board go into debt for the project.
It instead has approved a business plan that will see the board replenish $10 million of the reserves within five years of the project’s scheduled February 2014 completion.
Grant said the remaining $7 million had already been devoted to the $31.6-million centre, the balance of which will be funded with $13.5 million in proceeds from the sale of administrative properties and $900,000 in operating savings.
“The ministry is very anti-debt for new projects, so we’re using basically 100 per cent of our working reserves in order to avoid going into debt,” he said. “There’s no debt in the funding package for this project.”
Details on the project’s financing were offered last week at a public meeting required by ministry regulations, a two-hour open house that only drew two reporters and no members of the public.
Grant said the new 113,000-square-foot centre is expected to save $1.3 million in annual operating costs by consolidating staff from the existing Education Centre on Main Street West, and the Memorial building and former Maple Lane school in Ancaster.
Those savings will go toward restoring the working reserves, built up through budget surpluses since 2003, but the board will still need to “find a little bit more” each year to make up the balance by 2019, he said.
“In terms of a project this size, that’s a very quick payback period,” he said. “I think it just speaks to the soundness of the business plan.”
Grant said the board can only use sale proceeds from Memorial, the downtown headquarters and any other administrative properties the board has already sold to finance the project.
Unlike Memorial, which served as a school until 1979, Maple Lane is still considered a school under ministry regulations – it closed to students in 2005 – so if it were sold, the money could only be used for schools.
The board isn’t providing a breakdown of the $13.5 million in sale proceeds earmarked for the project, including because it has yet to put Memorial up for sale and McMaster University’s purchase price for the downtown centre remains confidential until the deal formally closes on Aug. 1.
All board employees are now out of the old headquarters – scheduled to be demolished to make way for a health campus – and have moved into temporary office space at Jackson Square as part of the Mac deal.
The Crestwood centre will be home to 478 employees and provide 406 parking spots, including 36 for visitors, and be the new site of the Mohawk Trail School, presently located at the corner of Mohawk Road West and West 16th Street.
The building’s design has been modified since an open house back in January. The centre will now shaped more like an H than the original U.