A proposed loan of nearly $30,000 for City of Powell River capital upgrades will likely be funded instead from the city’s COVID-19 safe restart grant money.
At the March 25 finance committee meeting, chief financial officer Adam Langenmaier provided a recommendation that the city be authorized to borrow $29,500 for the purpose of funding select 2020 capital projects for a period of up to five years. The projects were for completed technological upgrades.
Langenmaier said the loan would be spread over five years. The borrowing would be through the Municipal Finance Authority and would be carried at the short-term rate, which is currently 0.9 per cent.
He said the reason the finance committee was seeing this item was because the projects were identified in the 2020 to 2024 five-year financial plan, and when completed, could be funded from short-term borrowing. The total expected interest cost would be $801 and the annual expected payments would be slightly more than $6,000, according to Langenmaier.
He said there are some alternatives to short-term borrowing. He said the city could use the COVID-19 funds. There is an available balance in the reserve fund of about $1.9 million. The city could also rely on prior year’s surplus to cover the money required. Langenmaier said there was about $3.9 million available.
Mayor Dave Formosa said he was wondering, with such a small amount, why the city would borrow.
“I would think that setting up a loan for such a small amount seems a little odd,” said Formosa.
Langenmaier said the projects were identified in last year’s financial plan to be funded from borrowing. The projects have been completed and the city can go to borrowing to relieve that cost, he said.
Formosa said he’d prefer to take it out of surplus than set up a small loan.
Councillor Cindy Elliott said the financial plan in place was to borrow this small amount of money to cover off the capital expenditure. She asked how that would impact this year’s budget.
Langenmaier said it would not impact the 2021 to 2024 budget.
Councillor Maggie Hathaway said the upgrades could be COVID-19-related.
“Why wouldn’t we just take that money out of the COVID-19 safe restart fund?” asked Hathaway. She said her preference would be to take the money out of that fund.
Langenmaier said that is a reasonable option.
Chief administrative officer Russell Brewer suggested the committee make a recommendation to city council to fund the capital projects from the safe restart fund.
The finance committee gave unanimous consent to send the matter to city council.
