Council supports debt financing for battery plant land purchase

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The City of Windsor will take out a $45-million loan to buy land for an electric vehicle battery plant expected to create thousands of jobs.

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Council on Monday voted unanimously to issue debentures to Infrastructure Ontario to finance the purchase of 182 acres south of the expressway where a $5-billion factory is expected to be up and running by 2025.

“For debenture like this, we’re looking at terms that could range up to 30 years,” Joe Mancina, the city’s chief financial officer and treasurer, told council. “We’ll look at those options, interest rates, amortization factors, principal and interest payments, and then we’ll make the decisions and come with that formalized plan for council’s final (decision).”

This is the first time council has agreed to take on new tax-supported debt in years. For two decades, the city has been on a path to debt reduction, diligently sticking with a pay-as-you-go spending plan in an effort to escape its peak long-term debt level of $230 million in 2003. Back then, tax -supported debt represented about 68 per cent of the city’s total financial assets. Now, it has dropped to effectively zero.

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Council also approved that $8 million for site servicing be incorporated as part of the 2023 capital plan. When asked by Coun. Jo-Anne Gignac why the administration recommended separating the $8 million for site servicing 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 servicing costs. Additionally, there is “more opportunity” to fund the “smaller portion” required for site servicing through the capital budget with a pay-as-you-go model or sewer surcharge “or wherever the appropriate funds are,” he said.

Gignac, who said Mancina’s explanation made “a lot of sense,” said she wanted to make sure the city wouldn’t impact its capital budget “for just one project.”

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To land the battery plant, the city agreed to assemble 220 necessary acres at the corner of Banwell Road and EC Row Avenue. The city already owned about 42 acres and conditionally acquired the remaining 182 ahead of Stellantis and LG Energy Solution publicly announcing the plant in March. Council voted to expropriate the final required lot — a residential acre — in April.

While the city could use some of its more than $260 million in cash reserves to buy land, the city administration advised against it. It also advised against incorporating the cost into the city’s 10-year capital plan, which would result in the delay or deferral of other scheduled capital projects.

Given council’s recent approval of long-term mortgage debt financing for the Community Housing Corp. to fund repairs and renewal of existing public and non-profit housing complexes, the city’s long-term debt will now rise to an estimated $120 million.

Battery plant construction is expected to begin this summer.

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