Muskoka District Council has approved a motion to move forward with the Fairvern Nursing Home construction despite the large price tag.
District Council approved a motion on Monday which directed staff to formalize capital funding allocations and to move forward with the Provincial construction approval process. The development of the Fairvern facility will cost $94 million dollars, with $87.9 million dollars being provided by the Provincial government. The provincial funding is from a new government construction subsidy which was unveiled in the fall for municipalities to create new long-term care beds.
A key part of the subsidy is that the municipality will have to pay the full sum upfront, and the government will reimburse over the next 25 years. This means that the municipalities will face increased borrowing costs.
Councillor Guy Burry highlighted that despite the large sums from the provincial government, the District was still on the hook for significant payments. According to Burry, the home, which would have 160 beds, would cost an extra $2.4 million dollars per year. Burry stated that he wanted to ensure that this extra cost on local taxpayers was understood by councillors.
“No matter how we spend this $94 million the home will cost more to build and operate than the government funding model provides,” Burry said.
The District is under time constraints to begin construction on Fairvern. Further delays could result in the District losing the provincial subsidy and being on the hook for up to $51.1 million dollars. Burry also reminded council that this was another key concern.
“If we don’t deliver on time, we’re probably putting the district at risk of about $51 million,” Burry said.
Councillor Peter Kelley agreed with Burry that the extra costs were significant but wanted to ensure that council remembered who the real stakeholders were in this case.
“The stakeholders here are 900 some-odd people who are on what I heard is a seven-year waiting list to get into long-term care. Those are the stakeholders here,” Kelley said.
However, Kelley did highlight that design decisions made by council had contributed to the large costs of the project and limited the amount of potential new beds.
“We’ve made some design decisions, which essentially means that we are spending $94 million to house 160 residents. Had we stuck to the more modest standard approach as I understand it is the standard across the rest of Ontario, that money would have housed another 50 or 60 people beds,” Kelley said.
District Chair Jeff Lehman highlighted that a reason for the increased costs is that the Fairvern design is a result of lessons learned from the Coronavirus pandemic. Lehman also stated that the larger costs on the taxpayer were a result of the abnormal funding system used for the provincial subsidy.
Councillor Ruth-Ellen Nishikawa criticized the funding scheme which put the debt and interest payment burdens on the municipality as opposed to the province.
“I think this is quite a hardship to municipalities,” Nishikawa said.
District staff acknowledged that the $2.4 million figure used by Burry is a result of recent increases in interest rates. According to staff, a combination of large reserves as well as internal debt financing will allow for changes in interest rate in the future to potentially bring down borrowing costs for the project.
District council passed the motion, clearing a hurdle for the Fairvern project to move forward.
Don’t miss out on Doppler!
Sign up here to receive our email digest with links to our most recent stories.
Local news in your inbox three times per week!