With interest, police-HQ project to cost taxpayers $357M by middle of century
Interest charges expected to total $237.5M by 2051, when debt is paid off
Winnipeg's new police headquarters will cost taxpayers $357 million by the time all the project debt is retired — which will take more than three decades.
The price tag for buying Canada Post's old downtown Winnipeg complex and transforming it into the new home of the Winnipeg Police Service now sits at just under $214 million.
To allow the project to proceed, the city took on $155 million of external debt. According to city finance officials, interest charges on this debt will add up to $237.5 million by the time the debt is paid off in 2051.
That big interest bill, however, is mitigated by the city's use of a debt-repayment mechanism called a sinking fund. Over the course of four decades, the city will sock away millions in investment vehicles that generate enough revenue to eat up $94 million worth of the debt on the project, chief financial officer Mike Ruta said.
Still, the combination of the cash paid out by the city at the start of the police-HQ project, the interest charges on the debt and the sinking-fund contributions add up to a $357-million taxpayer tab over the course of the project's financed life.
"This project is a good reminder for us first-term councillors that we need to be aware of not just the price of a project, but the interest and the lifetime cost," said city council finance chairman Scott Gillingham (St. James-Brooklands-Weston).
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The city expects to spend $6.2 million in interest on the police-HQ debt this year alone, plus a $1.6 million contribution to the sinking fund, finance officials say.
To put that $7.8-million tab in perspective, it's about the same amount of cash the city plans to spend this year collecting litter, tending to public gardens and landscaping.
These payments are included in the city's annual operating budget, as are interest charges on other projects that require the city to borrow from external sources.
Council property chairman John Orlikow (River Heights-Fort Garry) said the $357-million is somewhat misleading, as it does not account for revenue from the sale of buildings no longer needed by the Winnipeg Police Service.
Officers moved into the new headquarters in June 2016.
Breaking down the numbers
$357 million
Total expected cost by 2051 of buying the former Canada Post complex and transforming it into the new Winnipeg police headquarters, including cash expenditures, interest charges on external debt and revenue from sinking-fund contributions.
This figure does not include additional costs associated with operating the former Canada Post tower and decommissioning the Public Safety Building — or revenue from the sale of surplus buildings no longer needed by the Winnipeg Police Service.
$213.5 million
Cost of buying the former Canada Post complex and renovating it, not including interest charges. This figure is based on the $209.8-million revised project budget approved by council in 2013, plus $1.7 million of critical-systems upgrades conducted after a rainstorm damaged the building in 2014 as well as $1.9 million worth of external security bollards that have yet to be installed. (Numbers do not add up to the decimal point due to rounding.)
$155.1 million
External debt incurred by the city to finance the police-headquarters project.
$237.5 million
Interest charges the city expects to pay on the debt by 2051.
$94 million
The drawdown on the debt the city expects to see by 2051, thanks to revenue from $61 million worth of sinking-fund contributions.
Sources: City of Winnipeg chief financial officer Mike Ruta, treasury superintendent Bob Adams and communications manager David Driedger.
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