Penticton city council will decide whether to go forward with borrowing $12.9 million after costs grew substantially since the 2022 budget was approved.
According to a staff report that will be before council on June 21, costs for the wastewater treatment plant and the Ridgedale Reservoir expansions, as well as the Penticton Avenue pressure reducing valve replacement all grew due to supply chain costs and other issues.
In particular, the wastewater treatment plant upgrades grew from a projected $5.9 million to over $9 million.
A portion of the costs would be covered through development cost charges, however, the costs are beyond what the DCCs could cover on their own.
The city would borrow up to $3.1 million, paid back over 20 years, for the waste-water treatment plant; $5.1 million for the pressure reducing valve to be paid back over 20 years; and $4.7 million for the Ridgedale Reservoir, also to be paid back over 20 years.
The existing pressure-reducing valve building, which needs to be replaced and expanded, was built with asbestos.
According to the staff report, as long as the long-term borrowing’s annual costs are less than five per cent of the previous year’s revenue, the city will not need to seek approval from taxpayers through a referendum.
With interest, assuming the city does not pay the loans off early through some windfall, the $12.9 million in loans will come with $11.1 million in interest over the 20 years.
The city has begun exploring grant funding, which could provide up to $6 million that would be used to pay for the pressure-releasing valve.
READ MORE: Penticton looks to internally borrow over $2 million to fix awkward intersection
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