Council gave staff the green light at Tuesday night’s meeting to complete the final required step for a long term loan to pay for the new facility.
Council approved borrowing 8.5 million dollars back in 2018 following a referendum, and last night it decided on a 30-year term.
Director of Finance Kari Bolton noted that they are catching a break on the cost of that loan right now…
“Interest rates are quite favourable right now. It’s expected that the interest rate will be approximately 1.5 percent when we take the loan in the spring.”
Bolton says that rate is for the first 10 years of that loan and then it resets at the current rates.
The anticipated payment per year at one and a half percent interest is $345,343.
Council had budgeted for a rate of 3 1/2 percent and a payment of $476,164 per year.
Mayor Bob Simpson is the Chair of the Finance Committee…
“The reason that the Finance Committee is recommending taking this approach is that it will net us about 130-131 thousand dollars, and because we don’t know yet the operating costs of the new facility, and our expectation is it will be higher, it’s just a bigger facility with more moving parts etc, that that then actually buffers, you know its a bit of a windfall, to buffer the operating cost increase that we expect.”
Councillor Martin Runge questioned why they wouldn’t want to pay it off quicker to cut into the amount of interest that the city would have to pay over the 30 years.
Simpson noted that when it comes to public sector financing, you have to look at equity over the generations that are going to have to pay for the facility…
“So over that 30 years there is 30 years of service to the entire community from that. If you shorten that 30 year period, you’re just putting a higher burden on that tax base for that short period of time. And if you did that in this case then what you’re saying that the current generation is not only going to be accelerating the payments for the facility, they’re also going to be bearing with additional tax increases the incremental operating costs.”
Because of that, Simpson say the 30 years is a more equitable distribution across ratepayers.
The total cost of the new facility is just over 12.7 million dollars.
Construction is currently in progress, as Council has been using temporary loans to pay for it, and the move in date will be sometime this winter.