Bayham taxpayers could be on the hook for the entire $6-million loan given to the Elgin Military Museum to pay for the HMCS Ojibwa submarine project.
Bayham officials issued a media release announcing the development in the late evening of Thursday, March 12 after councillors met behind closed doors to discuss the situation.
The Elgin Military Museum has defaulted on its repayment obligations to the Royal Bank and has until March 20 to pay what it owes.
Should the Museum not be able to make the payment, the letter of credit Bayham is responsible for will be called upon by the bank.
A public information session will be held for local residents to learn more about what the loan default means for them on Monday, March 16 starting at 7 p.m. at the Vienna Community Centre. A detailed “Public Information Sheet” was posted on the municipality’s website and can be seen by clicking here.
If the Elgin Military Museum cannot pay what it owes to the Royal Bank by March 20, Bayham will be fully responsible for the Ojibwa debt of $6-million.
Bayham councillors have already approved a plan where the municipality will debt finance the $6-million from the Toronto-Dominion Bank for a 10-year term loan over a 25-year amortization period at an interest rate of 2.71-percent.
That will require loan payments of $27,555.95 per month.
According to the approved plan, the $275,559.50 in payments required for the rest of 2015 will be paid for from reserves and will not affect the tax levy.
In 2016, if Bayham has not recovered any money from the Elgin Military Museum or obtained funding from senior levels of government, $330,671.40 will be required to come from local taxpayers representing a 10.3-percent levy increase.