Powell River Regional Hospital District’s committee of the whole is recommending that the 2024 provisional budget be adopted by the regional hospital board.
At the September 6 committee of the whole meeting, directors considered the provisional budget, which provides the basis for operations and capital until the final budget is adopted in March 2024.
Outlining one segment, manager of financial services Linda Greenan said the plan for the Willingdon Creek Village debt had been that the hospital district would pay off a big portion of that debt when it is renewed in 2024. She said when she discussed the strategy with the Municipal Finance Authority of BC years ago, it was permissible. She recently had discussions with the authority to double-check her calculations and was informed that the authority no longer allows local governments to pay down a portion of the debt.
Greenan said if the hospital board was to pay out early, it would have to pay the whole debt.
“You can’t just pay a portion of it,” she added. “What that means is we won’t have that opportunity.
“The good news is that they have already renegotiated the debt for Willingdon Creek Village and the new interest rate will be 4.52 per cent, so it was less than what we were concerned about. We were concerned it might go up to six or seven per cent.”
Greenan said this would bring debt payments from the current $1,488,616 per year to $1,832,000 in 2024, which is a difference of $343,000 per year.
“When we do the first budget draft, I’ll propose a new strategy to use some of the interest from the $4 million savings we have, and then there will be a difference we’ll have to get from taxation, or take from the reserves we have set aside,” said Greenan. “The impact from the requisition is not going to be as substantial as we were concerned about.”
Electoral Area B director Mark Gisborne said Greenan had been helping the hospital district build reserves over the years to allow for the paydown, so that at renewal, the district is not being eaten by interest and the debt.
“It feels like the municipal finance authority has pulled the carpet out from under us,” said Gisborne.
City of Powell River director and regional hospital board chair George Doubt said that Electoral Area C director and regional board chair Clay Brander was the municipal finance authority representative, and that Doubt was filling in for him at the semi-annual finance authority meeting. Doubt added that he would ask the question about debt repayment at the meeting to see if he could come back with a plan.
Doubt asked if the hospital district had been setting aside funds in anticipation of being able to pay down the debt.
Greenan said funds had been set aside for that purpose.
Doubt said that would give the hospital district a cushion and perhaps some of the funds could be directed to some other purpose. He asked if that would be part of the coming budget discussion. Greenan said it would be.
Gisborne asked the amount of reserves being held for the purpose of paydown. Greenan said there is $4,837,000 in the reserve.
The committee recommended that the board approve the 2024 provisional budget, that any surplus from the 2023 budget be transferred to reserve, and that the provisional budget be presented for adoption at the September 27 regional board meeting.
Greenan said during question period that the differential in annual payments on the Willingdon Creek Village debt between what Vancouver Coastal Health (VCH) is paying annually in lease payments and what is owed to the municipal finance authority cannot be made up by VCH because the lease payments are locked in.
