Bleak Progress Fund projection; squeeze on Benson Center payments

Low interest rates are putting the squeeze on Cornwall's payments for its debt on the Benson Center, seen here in a 2011 photo. (City of Cornwall via Newswatch Group, File)

CORNWALL – Low interest rates may be good for borrowers but it’s straining the bottom line of the city’s Progress Fund.

The $25 million fund, created from the sale of Cornwall Electric in 1998, is projected to earn its lowest income since its creation in 1998.

The amount earned has been steadily declining the last eight years when it brought in $1.3 million in 2008.

CFO Maureen Adams told Cornwall Newswatch the Progress Fund will likely generate roughly $550,000 by year’s end.

All the income generated is already earmarked for debt payments to Cornwall’s $10.7 million portion of the Benson Center.

Those payments (roughly $719,000 a year) will eclipse the interest income. The municipality will have some breathing room though, as there’s $451,000 outside of the $25 million principal that’s not been allocated.

Unless interest rates rise in the next year or so, Cornwall could theoretically run out of money outside of the principal to make those payments.

That could leave the city in a difficult position. Outside of the two-thirds senior government funding and the $2 million raised by the community through the “3+1 Project 2010” initiative, the sportsplex was touted as a project that would not become a burden on ratepayers.

The Progress Fund principal is invested in money market, bond funds and GIC’s, earning anywhere from 1.9 to 2.46 per cent. The city is limited by provincial rules to low-risk investment options.

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