Fusion puts $43M into water projects

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This article was published 06/11/2024 (360 days ago), so information in it may no longer be current.

Westman-based Fusion Credit Union and the City of Brandon are collaborating with the Canada Infrastructure Bank in what is being touted as an innovative, “first of its kind” financial agreement.

Last March, the Canada Infrastructure Bank announced it would be providing $43 million for two major water infrastructure projects in the City of Brandon, part of a larger announcement of $140 million in low-interest loans for Manitoba municipalities.

The loans have been earmarked for Brandon to continue upgrades at its water treatment plant and to facilitate the southwest lift station project.

Tuesday’s announcement of a $43-million debenture from Fusion Credit Union — matching the dollar amount of the CIB loan — is the final financial piece for both projects to move forward.

“We’re investing alongside Fusion 50-50 with them,” Canada Infrastructure Bank’s director of investments, Alex Ryan, said following a press conference held at Brandon City Hall on Tuesday. “So every dollar the CIB is putting in, there’s $1 going in from Fusion Credit Union.”

“We’ve not been partners with the city on a project like this (before),” added Fusion Credit Union CEO Darwin Johns. “In fact, this is the first of its kind in Canada.

“We truly believe that this is a groundbreaking model that we can use, package and provide either information to our local municipalities to help them leverage federal funding through the CIB and the Province of Manitoba to line up against private dollars, or line up with private dollars to be able to leverage those funds.”

The Canadian Infrastructure Bank, the City of Brandon and Fusion Credit Union have been working together on this deal for the last 20 months, Johns said.

The process of working with both the city and the CIB has been long and complex as they worked through the details, said Melissa Rushton, Fusion Credit Union’s director of credit risk.

“Like Darwin said, this has never been done before, so it was kind of working through all the due diligence, the details, the legal pieces, to understand how this could work for us because it isn’t the traditional municipal financing that we’re used to,” Rushton said.

City staff have said the southwest lift station project, which will see the construction of two new lift stations and associated force mains, is necessary because the current wastewater system in the area is close to capacity. Last December, city staff said the estimated price tag for the lift station project was in the neighbourhood of $31 million. It was reported last year that the estimated cost of the final phase of upgrades and expansion to Brandon’s water treatment plant would cost about $155 million — though Mayor Jeff Fawcett told the Sun on Tuesday it would probably be somewhat higher.

“We’re still currently working with other levels of government on some of these projects,” Fawcett said. “Up to this point, the federal government has probably done what they’re going to do. They’ve been a big, big partner on this, and this was sort of their initiative as well.”

As previously reported by the Sun last year, the federal government has committed $46 million to the water treatment plant project, the provincial government $53.33 million — including the January announcement — and the City of Brandon $40.67 million.

According to the city, the borrowing for the Southwest Lift Station is expected to be funded through development charges.

Following a toast to the agreement by those gathered at the city’s press conference yesterday — which was intentionally done with glasses of water — Brandon East NDP MLA Glen Simard said the agreements announced Tuesday would help the city grow and sustain itself into the future. For those who are concerned about the city taking on a huge new debt load, he said this kind of project was a necessary step for the community to take.

“Brandon’s growing, and Brandon has great needs, and the ability for Brandon to build a sustainable future might require projects such as these,” Simard said.

Ryan agreed, saying that the alternative to not preparing for the future would ultimately stunt the city’s capacity for growth, and hurt ratepayers down the road.

“Water is a critical service for the people of Brandon,” Ryan said. “Water treatment and the availability of clean drinking water is critical, not only to today’s citizens of Brandon but also future citizens of Brandon. To be able to plan for that growth is really important.”

What makes the collaboration between Fusion, the City of Brandon and the Canadian Infrastructure Bank so groundbreaking, Ryan said, is that this is the first investment and financial close under the CIB’s new Infrastructure for Housing Initiative.

“It’s something that the CIB created in response to a call from our (federal) minister late last year in an updated statement of priorities and accountabilities to do more to help new housing development across Canada,” Ryan told the Sun. “We are not (the Canada Mortgage and Housing Corporation). We do not invest in housing directly, but we’re investors in infrastructure. And infrastructure capacity is a critical element necessary for new housing to be built.”

A great example, Ryan said, is the City of Brandon’s plans to service the southwest corner of the city by creating the capacity for new housing growth that wouldn’t be there otherwise. And by increasing the treatment capacity at the water treatment plant, the expansion will allow for the construction of new houses and new businesses into the future.

It’s expected these historically large investments — the largest the city has ever witnessed — will not only provide clean drinking water to the equivalent of 47,000 households, but also pave the way for the construction of 2,300 new housing units.

As part of the agreement, CIB will offer its loan with a below-market interest rate, allowing the city to save approximately $1 million per year in payments. The Fusion Credit Union loan, Rushton said, is more of an investment into the community. The credit union loan is offered with its market interest rate, which it didn’t specify.

“Typically when we do financing for a municipality, we take very traditional forms of security — we would look at pledges of taxes and things like that. This is a little bit different because we acted as a private investor, so to speak,” Rushton said.

She said that the Public Utilities Board has been instrumental in working through some of the finer points of the deal, helping the financial organization look at a different kind of collateral.

“It’s the actual funds from everyone paying their water bills that will, you know, come back to pay the loan out, essentially,” Rushton said. “And that’s a little different than our traditional ways.”

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