qathet Regional District’s finance committee is recommending that the regional board convert short-term borrowing for the resource-recovery centre and transfer station into a 20-year term.
At the November 6 finance committee meeting, directors considered a potential motion that recommends the regional board enter into an agreement with the Municipal Finance Authority (MFA) of BC to secure long-term borrowing debt of up to $6.4 million for the resource-recovery centre, to be paid back over a 25-year term.
Electoral Area B director Mark Gisborne said there had been three options presented by staff in a report to directors, with the recommended option being option two, specifying a term of 25 years. Gisborne asked about option three, which set the borrowing duration to 20 years. He asked about the savings from the shorter loan period.
qRD manager of financial services Linda Greenan said the shorter the term, the lower the interest that will be owing over the life of the borrowing. She said, however, that does increase the amount of money that has to come from the waste management service to pay down the debt.
City of Powell River director Cindy Elliott said interest rates were trending down and asked if a short-term loan could be taken to see if interest rates could be better in the long term.
Greenan said the regional district could do that. She said there are two MFA borrowing issues each year, in the spring and in the fall. She said the regional district could decide not to borrow in the spring and then wait until the fall.
“We are trending down [in interest rates] right now and we could save money by waiting a little bit,” said Elliott.
Electoral Area A director Jason Lennox said it appears that adopting option three would save $2.6 million in interest if it was adopted rather than a 30-year term, which was option one. Greenan said that number was correct.
Gisborne put forward a motion for a 20-year borrowing period. He asked if there needed to be an amendment to the motion for borrowing in the fall of 2025, rather than the spring of 2025.
“Hopefully, the interest rates keep going down,” said Gisborne.
Greenan said it would be appropriate to specify a timeline for the borrowing for the MFA fall issue in 2025.
Electoral Area D director Sandy McCormick said she was not opposed to borrowing in the fall, but she favoured 25-year borrowing.
Gisborne said he would like the money saved from a shorter term going into services, rather than servicing the debt over a longer term.
“I would rather take the heat now from a higher tax rate that is going to save us money over the long period,” said Gisborne.
McCormick said when she looked at the three options in the report, there is a 1.6 million difference in interest between 30 years and 25 years. She said with 20-year borrowing, there was a $1 million difference in interest between that and 25 years.
“What that does is put an incredible burden on taxpayers who are already shouldering the huge bulk of the financing from the resource-recovery centre,” said McCormick. “I don’t believe we can ask them to pay much more, and 25 years provides a nice balance.”
Electoral Area C director and board chair Clay Brander said in his electoral area, the difference between 20-year and 25-year debt was only about $7 per $100,000 of assessed value, for a $43 annual cost for an average single-family home, so he was in favour of the shorter term.
The finance committee unanimously carried the recommendation that the board approve up to $6.4 million over a 20-year term, to be taken out for the fall 2025 MFA issue. The regional district will continue to pay the interest for short-term borrowing for the resource-recovery centre until the long-term borrowing is taken out.
If approved by the regional board, this will be the second long-term debt issue the regional district will have taken out for the centre. Greenan said the regional district had already done one security issuing bylaw for $5.5 million for a 30-year term at an interest rate of 4.79 per cent.
If the board approves the second security issuing bylaw, there will still be up to $2.5 million owing on the resource-recovery centre, which will be paid either through more long-term borrowing, or through a proposal to be considered by the regional district and City of Powell River to use community works funding to pay off the remaining total.
Join the Peak's email list for the top headlines right in your inbox Monday to Friday.
