qathet Regional District directors were provided an update on the Powell River Regional Hospital District’s attempt to paydown the debt on Willingdon Creek Village by $4 million.
At the October 4 regional district finance committee meeting, City of Powell River director and Powell River Regional Hospital District chair George Doubt reported on a meeting of the Municipal Finance Authority of BC (MFA) at the Union of British Columbia Municipalities convention in September.
“We had talked at the regional hospital district meeting about a plan to paydown some long-term loans with the hospital district from the MFA,” said Doubt. “The manager of financial services [Linda Greenan] had reported at the meeting that they had tried to pay down that long-term loan and the MFA had said the rules have changed.
“I committed to getting an answer at the UBCM meeting but well before that, the day after our hospital board meeting, a representative from the MFA contacted me and asked to have a meeting at the UBCM.”
Doubt said the explanation was in 2019, the rules on early payment of long-term loans had changed. He said the reason for that was the process of repaying long-term loans involves the regional district paying interest and principal, and some money to reserves. All the reserves are congregated together and reinvested, providing protection and lower possible interest rates, said Doubt.
“The pool of money that goes in there with every payment until the end of the loan is actually owned by every municipality that has a loan,” said Doubt. “If one municipality or regional district was allowed to pay off early, it would affect the rights of the other people.”
Doubt said the MFA realizes it could improve its communications and they will do that.
“One of the encouraging things that came later in that meeting was the interest rate [for Willingdon Creek Village] was lower than we expected it might be, at slightly over four per cent,” said Doubt. “The solution they offered at the MFA was that they have an investment facility where the regional district could invest its reserves and earn five per cent, while we are paying four and a half per cent. It could end up a better deal than early repayment of the loan.”
Doubt said he was really impressed that the MFA contacted the regional district when they heard about the question after reading the Peak’s account of the attempt to paydown the long-term loan.
Greenan said at the December hospital board meeting, she will put forward some options regarding how to use the money that was in reserve for the paydown of the Willingdon Creek Village loan.
Greenan said the new payment on the loan, at 4.52 per cent on renewal, will be about $340,000 more than the regional hospital district is paying now. She said if the hospital district earns five per cent on the invested funds, some of that amount could be offset.
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