Province loans North Rustico $3.5M to help cover arena debt after major cost overruns
CBC
Prince Edward Island's cabinet has approved a multimillion-dollar loan to help the Town of North Rustico with debt connected to the construction of its new arena.
According to public documents from executive council dated Sept. 3, the province authorized Finance P.E.I. to provide a $3.5-million loan to the town over a five-year term.
North Rustico's council applied to the P.E.I. government for the loan to help pay off some of the debt associated with the Eliyahu Wellness Centre, which was built to help host the 2023 Canada Games.
The centre was supposed to cost $10 million, but that price tag more than doubled to about $23 million, with the town citing the impacts of the COVID pandemic, labour shortages, supply chain issues and inflation.
CBC News confirmed last year that $2.5 million in liens had been registered against the town for unpaid bills — one for more than $1 million.
At that point, about $400,000 in work still needed to be done to install ventilation systems, complete the kitchen and canteen, address outside drainage concerns, and finish landscaping.
The town of about 650 people on P.E.I.'s North Shore has been working with the province and a private consultant to try and figure out what went wrong.
North Rustico had earlier taken out a bank loan worth $3.4 million to fund construction of the wellness centre, part of about $5 million in debt the town is currently carrying.
Under P.E.I.'s Municipal Government Act, municipalities can't borrow money for capital construction if their debt would exceed 10 per cent or more of their total assessed property values.
For North Rustico, that cap kicks in at about $10 million. The loan authorized this week takes the town up to about $8.5 million.
North Rustico's chief administrative officer previously said they hoped to negotiate to pay off the loan over the expected lifetime of the rink to help the town make the payments.
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