To the chagrin of a resident, City of Powell River Council passed two motions relating to Powell River Waterfront Development Corporation (PRWDC) without posting notice of decisions or launching public consultation.
During a recent council meeting, councillors voted unanimously to waive the appointment of an auditor for PWRDC pursuant to Section 203 of the Business Corporations Act for each of the following years: 2008, 2009, 2010, 2011, 2012, 2013 and 2014.
A second motion pertained to a $225,000 loan taken out by PRWDC on July 4, 2013, from First Credit Union. The motion stated that according to a memorandum of understanding, PRWDC shall not exercise its borrowing authority without authority from the city, so the city was confirming and approving the loan agreement between PRWDC and the credit union. This motion also passed unanimously.
During question period at the end of the council meeting, George Orchiston, who has challenged councillors on these motions at the committee level, said he had asked three or four times if, for the security agreement with First Credit Union, there was a borrowing resolution provided by PRWDC to the credit union.
Shehzad Somji, the city’s chief financial officer, said it had been.
Orchiston asked Mayor Dave Formosa, when the former chief financial officer went to the credit union to secure the loan, if he had knowledge. Formosa said he was aware.
Orchiston then asked the mayor if he was aware under the memorandum of understanding that the city had to provide written authorization prior to PRWDC securing that loan.
Formosa said he was unaware.
Orchiston said the loan was unauthorized, but Mac Fraser, the city’s chief administrative officer, said it was believed at the time that it was not necessary for council to authorize the loan. He said the city received advice to the contrary that written authorization was required.
Orchiston then brought up the guarantee for the $225,000 loan. He said PRWDC signed the commercial security agreement putting the city’s assets, the city’s share in the PRSC (Powell River, Sliammon, Catalyst joint venture) lands, up for a loan guarantee.
“My position is when they signed that security agreement, putting those shares up for security, they were putting the city’s property at risk,” Orchiston said. “Therefore, the city is actually guaranteeing the loan.”
Formosa said that if PRWDC was to default on the loan, he would do everything in his power to ensure the security was not lost.
“In this world, when you want a loan, you need to provide security of one form or another,” he said. “In this particular case, it is the city’s company and that company pledged those shares for the loan.”
Orchiston said that if the shares that the city put up for the loan can be classified as a guarantee, his concern was that Section 24 of the Community Charter requires the city to provide notice to the citizens. Formosa said he is not a lawyer, so Orchiston suggested he ask a question of the city’s lawyer, that being: “Is it possible that we could lose those shares if the PRWDC fails?” He then suggested the question be asked of the credit union because that would be less expensive.
Formosa said the answer is yes because it’s the security that was pledged.
Orchiston said that means it is a guarantee, and if a guarantee is being pledged, notice by the city is required.
He said he would write his question for the city.
