On Tuesday, March 26, Ritchot’s council held a vote that would make or break an initiative for a new daycare facility at 372 Main Street in St. Adolphe. The final result was 3–2 in favour of moving forward with a borrowing bylaw to finance the project.
Council was similarly divided on March 20, when the borrowing bylaw came up for its second reading. Councillors Shane Pelletier, Ron Mamchuk, and Janine Boulanger tipped the scales in favour of the project. Mayor Ewen and Councillor Claydon maintained their votes against the initiative as proposed.
The idea of a borrowing bylaw, first released to the public last November, was based on a $1 million loan from the RM to the local nursery school, a loan which was to be paid back by the nursery school over 20 years at an interest rate of 1.75 percent. Along with Manitoba Hydro and provincial grants, as well as a fundraising initiative by the daycare committee, it was anticipated that the total estimated cost of almost $1.8 million could be achieved.
Last fall, the proposal’s first reading ended with a unanimous vote in favour from the mayor and all councillors.
Now, four months later, many residents were shocked to learn that two council members, Ewen and Claydon, had changed their minds.
Council Votes
So what swayed their votes against the project?
“I would like to remind council that we around this table are the ones borrowing the million dollars for this project,” said Councillor Claydon at Tuesday’s meeting. “It’s not the daycare that is borrowing the million dollars, [it] will simply be the leaseholder… and we as council are here to ensure the municipality remains fiscally responsible as we oversee transactions that are [unique] in nature. We… will be held accountable for our decision for many years to come.”
Claydon’s concern revolved around an unconventional plan that would see the RM acting as both lender and borrower. The daycare would simply lease the building. In this scenario, the RM will be responsible to pay the million dollars back into its own surplus fund over the next 20 years, whether or not the daycare succeeds. The RM would, presumably, also assume responsibility for cost overruns on remediation and reconstruction of the building, expenses which could exceed the nominal contingency fund.
As it stands, the building is aging and has the potential for toxic contamination due to its previous uses as a car and RV dealership. Without a complete deconstruction of the concrete floor, roof, and walls, Claydon contends that there’s not enough certainty regarding asbestos in the interior and waste oil contaminants in the soil beneath the building, let alone fumes and odours in the walls.
Councillor Boulanger felt more certain, having previously reviewed documentation presented by the architect and geotechnical engineer for the project. In the end, Boulanger felt confident that affordable options are available and that the nominal contingency monies will be enough to allow for reconstruction overruns that would meet the province’s daycare codes.
“My biggest concern that we still haven’t come to an agreement or conclusion on is what happens if the daycare defaults on payment,” said Mayor Ewen. “This may not happen over our time as council, but for future council, are they willing to make a tough choice and take legal action [against] a daycare? …I don’t believe that this is the right type of bylaw or the right type of loan for this project.”
“To be honest, this has been a struggle,” Boulanger countered. “But, as in all other council decisions, I have to stick to the facts that have been presented to me… I have confidence that the daycare will make this work. Of course, there’s that question of ‘What if?’ but… all parties have done their best to address as many unknowns as possible… It is the best option considering the time constraint that we are in. If we don’t do anything, we will lose the government funding and there are no guarantees that future government funding will become available.”
CAO Mitch Duval was asked to weigh in on options council might have should they be faced with a default on the loan down the road. While he had no firm answers, he suggested that provincial daycare subsidies could help alleviate some of that concern.
“When it comes to the numbers, if we were talking a private business, I would say a definite no, but that is not the case here,” Duval said.
Pelletier, too, felt that council had done their due diligence to ensure the daycare’s long-term viability.
“I’m confident that we’ve made a lot of the right decisions that will alleviate as much of the concerns about the building as we can,” said Pelletier. “I think it’s a win situation for us.”
Councillor Mamchuk stuck to the sentiments he had previously shared at the March 20 meeting.
“Things change, life changes, everything changes,” said Mamchuk. “We’ve got to move forward.”
Confidence Shaken
For all that was shared at the public meetings regarding the daycare initiative, much was also left unsaid. At least two Ritchot residents say their confidence in council has been shaken through this ordeal. Both requested anonymity in order to share their concerns.
“At the third reading of the bylaw, you made a choice,” one resident relayed to council in a recent email. “Not only a choice that supported a daycare project, but also a choice to ignore the financial implications of this bylaw and a choice not to inform your constituents of all of the risks associated with it.”
While this resident applauds Ewen and Claydon for seeing the bigger picture, the resident is disappointed with the councillors who pushed through a proposal that is unlikely to set the daycare up for long-term success.
“Just because you ‘believe’ in something, it is an abysmal argument, especially when you are aware that the numbers aren’t there,” the resident explains.
Like the mayor, councillors, and most residents, both of these individuals are firmly in support of better daycare options in St. Adolphe. They have children of their own in daycare. But they both currently sit on a local daycare board and work as chartered professional accountants, giving them insight others may not have.
After council’s November public meeting, these residents began to crunch the numbers, creating spreadsheets with a variety of different scenarios provided by the daycare’s and the RM’s proposed financial plans. The reality, they said, looked bleak, if for no other reason than the project would saddle a not-for-profit entity with a million-dollar repayment expectation.
In December, they met with council to relay their concerns. They said that council’s financial analysis of the project was missing data integral to understanding the big picture. For example, they said council wasn’t considering the $600,000 that the municipality had already invested in the building upon purchase. Other costs seemed to be ignored as well, including renewal of the driveway and grounds and ongoing sewer costs.
These residents say that answers to their questions weren’t forthcoming. They can only assume now that the RM will take care of the costs of potential utility overruns and is willing to forego the property tax revenue they might have collected had the building been sold or leased to a business.
As well, they question council’s decision to apply such a low interest rate to the loan. Typically, they say, the RM would apply interest at market rate to debentures added onto the residents’ property tax bills.
“We’re not making much interest revenue on the surplus, but we are making two percent, so we’re already losing .25 percent by taking it out of the surplus fund,” says one of the residents.
As an alternative, they say many daycares solicit donations from local residents and businesses to fund their building projects, since they can offer charitable receipts.
“Daycares aren’t built with hopes and dreams, they are built with money,” said one of the residents to council prior to their final vote. “They aren’t built overnight, they take years of proper planning. I expect council to continue supporting the daycare project. However, I urge you to go back to the drawing board and come up with a more responsible plan to mitigate financial risk, as the funds being used belong to the ratepayers.”
Plea for Alternatives
Lease payments for the St. Adolphe daycare have been set at almost $60,000 per year and utilities are estimated at around $18,000 a year for a total cost of about $78,000.
Further to that, the daycare will be looking at ongoing costs related to staffing, insurance, cleaning services, and a reserve for the replacement of expensive equipment such as commercial appliances and specialty items with a relatively short life cycle but which are mandated by Manitoba’s health and safety regulations.
Aside from managing all these costs, the daycare board has committed themselves to short- and long-term fundraising to make the project viable. Initially, council challenged the committee to raise $100,000 for the project. At Tuesday’s meeting, council voted unanimously on an amendment to the partnership agreement between the RM and the daycare. The $100,000, once raised, will be applied directly to construction costs.
The committee will then need to raise another $110,000 to furnish and equip the facility. According to the residents, an ongoing fundraising bar of $24,000 per year was factored into the feasibility of the daycare’s financial plan. This still doesn’t address the need for playground equipment, which can often run from $75,000 to $100,000 for a play structure alone.
Amidst this, the St. Adolphe daycare will be working with a fee structure that is strictly regulated by the provincial government, leaving no option for amendments to individual daycare fees to make up for losses.
As Councillor Claydon eluded to at the March 20 meeting, most daycares never run at 100 percent capacity. This isn’t for lack of children on the waiting list but rather due to ensuring that registered children continue to have spots in the daycare as they graduate through the programs. If a spot comes available in the school-age level, for instance, they must take into account the children that are already enrolled in the infant program who will be needing that spot down the road.
The residents had hoped, through their initial contact with council last year, to steer them in a direction to look for alternatives.
“We want to see this project succeed,” the residents said. “We absolutely support the obvious need for a daycare in the community of St. Adolphe. Saying no to this bylaw is not saying no to the daycare project; it just means that we need to come up with a better solution to ensure the long-term success of this project.”
Daycare Committee Response
The daycare board had only one short comment regarding Tuesday’s vote.
“The daycare board is looking forward to continuing our work with the RM on the daycare development project,” says Michael Hiebert, member of the St. Adolphe daycare board and a committee member on the RM’s daycare development project team.
No other comments from the committee were made available.