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The City of Windsor will take out a $45 million loan to buy land for an electric vehicle battery plant that is expected to create thousands of jobs.
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Council voted unanimously on Monday to issue debentures to Infrastructure Ontario to fund the purchase of 182 acres south of the highway where a $5 billion plant is expected to be operational by 2025.
“For a debenture like this, we’re looking at terms of up to 30 years,” Joe Mancina, the city’s chief financial officer and treasurer, told council. “We will review these options, interest rates, amortization factors, principal and interest payments, and then make the decisions and present this formalized plan for the final board (decision).
It is the first time the council has agreed to take on new tax-funded debt in years. For two decades the city has been on the road to debt reduction, steadfastly sticking to a pay-as-you-go spending plan in an effort to escape its peak long-term debt level of 230 million in 2003. At the time, tax-backed debt accounted for approximately 68% of the city’s total financial assets. Now it has dropped to zero.
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The Board also approved that $8 million for site maintenance be incorporated into the 2023 capital plan. When asked by Con. Jo-Anne Gignac why the administration recommended separating the $8 million for site maintenance from the $45 million for land acquisition instead of seeking a combined $53 million loan from Infrastructure Ontario, Mancina said there may be opportunities for grant funding to cover some site maintenance costs. Additionally, there is “more opportunity” to fund the “smaller portion” required for site maintenance through the capital budget with a pay-as-you-go model or a sewer surcharge” or there where are the appropriate funds,” he said.
Gignac, who said Mancina’s explanation made “a lot of sense,” said she wanted to make sure the city wouldn’t impact her capital budget “for just one project.”
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To land the battery factory, the city agreed to assemble the necessary 220 acres at the corner of Banwell Road and EC Row Avenue. The city already owned about 42 acres and conditionally acquired the remaining 182 before Stellantis and LG Energy Solution publicly announced the plant in March. Council voted to expropriate the last required lot – a residential acre – in April.
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Council Considers Debt Financing for Land Purchase of $45 Million Battery Factory
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The city will expropriate land for a battery factory
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The $5 billion Windsor Battery Plant is the largest private sector investment in Ontario history
While the city could use some of its more than $260 million in cash reserves to purchase land, the city administration advised against it. He also advised against incorporating the cost into the city’s 10-year capital plan, which would cause other planned capital projects to be delayed or postponed.
With recent council approval of long-term mortgage financing for Community Housing Corp. to fund repairs and renewals of existing public and nonprofit housing complexes, the city’s long-term debt will now reach approximately $120 million.
Construction of the battery factory is expected to begin this summer.
