Referendum process for new fire hall discussed at City of Powell River meeting

City of Powell River councillors will vote on whether to have a referendum for a new fire hall/emergency services facility on the October municipal election ballot.

At the March 24 finance committee meeting, councillors were presented three recommendations to set the process in motion. The first is that the fire hall loan authorization bylaw be read three times and referred to the inspector of municipalities for approval.

The second is for a referendum question, which reads: Are you in favour of the City of Powell River adopting the fire hall loan authorization bylaw to authorize the borrowing of a sum not to exceed $7.5 million over a maximum term of 20 years for the purposes of building a new fire hall facility at 7160 Duncan Street?

The third recommendation is for staff to be directed to include a $7.5 million fire hall facility project in the 2022 to 2025 financial plan for the year 2025.

At the finance committee meeting, chief financial officer Adam Langenmaier said staff had been directed to bring back a loan authorization bylaw.

“What we need to do is establish a bylaw, get it to first three readings and then send it to the inspector of municipalities for approval; so far, the bylaw is for $7.5 million as directed,” said Langenmaier. “We can set the length of time we want this loan to be. I have a table that outlines a 10-, 20- and 30-year scenario. My recommendation is for council to consider and adopt a 20-year lifespan for this loan.”

Langenmaier said the 10-year term makes the annual payment too high. He said there is a saving in interest payable, but it will put financial strain on the city to come up with an annual debt servicing cost of $883,000 for 10 years.

“By extending that span to 20 years, our annual payments are at $507,000,” said Langenmaier. “With some other debt that is expiring, we will likely be able to transition with reasonable ease to pay this one out. If we go to a 30-year term, the amount of interest you pay starts to become really big.

“We will have some other 30-year loans from the sewage treatment plant, so that’s why I make a recommendation that a 20-year lifespan be considered and adopted, because it hits that balance.”

Langenmaier said if the interest rate is three per cent, the total interest payable will be $4.5 million on a $7.5 million loan for 20 years.

With regard to the city’s debt servicing limit, the city still has room to take on this debt, said Langenmaier, adding that the city would go from 37 per cent of debt servicing utilization to 40 per cent.

“We’re okay with the amount of debt we have and it won’t push us to the highest among our provincial peers,” he added.

Langenmaier said the bylaw needs elector approval so it must go to referendum if council gives a direction.

Chief administrative officer Russell Brewer said because of the inspector of municipalities’ preferred timeline, the first three readings of the fire hall bylaw will likely go to council in June.

The finance committee gave unanimous consent to send the first two recommendations to city council at the appropriate time, and that direction could be given to staff to include the third recommendation in the five-year financial plan.