City of Powell River Council has approved the borrowing of another $5 million for the consolidated wastewater treatment plant in Townsite.
At a December 1 meeting, council approved long-term borrowing from the Municipal Finance Authority of British Columbia (MFABC) in the spring 2023 borrowing session in the amount of $5 million as authorized by the liquid waste treatment plant loan authorization bylaw, and that qathet Regional District (qRD) be requested to consent to the city borrowing these funds from MFABC over a 30-year term.
City CFO Mallory Denniston said it is a procedural request, and that the city needed a consent to borrow because the funding runs through qRD.
“The municipal finance authority is the only way for municipalities in BC to access long-term debt,” said Denniston. “Rather than dealing with the 162 municipalities, they prefer to work with the 17 regional districts. That puts us in a position to work with our regional district.
“We are three years into the process of having the loan authorization bylaw approved. In order to draw on that loan authorization bylaw, we need the funding approved in the budget. This $5 million is already approved in the 2022 budget.”
Denniston said the regional district needs to know about the loan request by January because that is the deadline to put this request forward to its board. She said the regional board then issues a security issuing borrowing bylaw, and sends that to MFABC; in the spring, the city gets its money.
“It’s a very long process and we stay on top of it to ensure we have the funds to adequately fund this large project,” added Denniston.
Denniston said in 2020, the city received $10 million at 1.99 per cent, in 2021, $5 million at 2.58 per cent and in 2022, another $5 million at 4.09 per cent.
“We’re happy we took the approach of staggering our debt to spread out our interest rate risk,” said Denniston. “It has worked out in our favour. However, we are seeking $5 million in 2023 and we’re not sure what the interest rate climb will be at that point, but we are fortunate to have some low rates for our earlier debt.”
Debt now $25 million
The latest borrowing will put the city at a $25 million debt for the wastewater project. Denniston said the current approved plan is $27.28 million. She said for the final $2.28 million, it will be advantageous to use temporary borrowing, which allows the city to borrow the money and pay daily interest until the project is complete, to ensure borrowing is not over-committed.
“MFA allows us to return any funds we don’t need to complete the project and lock in the amount we do need to keep,” said Denniston.
Councillor Trina Isakson said the city is borrowing and also drawing money from reserves for the project. She said she is wondering about the decision to draw from debt when there is still room left in the reserves.
Denniston said in the city’s draft 2023 budget, it shows $7 million being pulled from reserves and a proposed $3 million from debt. She said draft two of the budget will be a good time to have that discussion.
Councillor Jim Palm said council has heard horror stories of what is happening with wastewater projects elsewhere in the province.
“I want to assure the public our staff has done a great job of purchasing all of the equipment for this build a long time ago, so we are not facing those interest rates that are rearing their ugly heads now, having costs rise,” said Palm. “Our staff is working overtime to make sure they are bringing this online in the most cost-effective way they can.”
Council voted unanimously in favour of the borrowing bylaw.
