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Additional borrowing requested for wastewater treatment plant in Powell River

Chief financial officer outlines recommendation for 3.4 million more in loans
Powell River City Hall.

City of Powell River councillors have received a request to increase borrowing for the consolidated wastewater treatment plant by $3.4 million.

At the February 1 committee of the whole meeting, chief financial officer Adam Langenmaier brought forward a request for an amendment bylaw, which would increase city borrowing from $27,280,000 to $30,701,000 to fund construction of the plant. The recommendation calls for council to provide the first three readings to the bylaw and forward it to the provincial inspector of municipalities.

Langenmaier said it has been determined and reviewed that a few items in the liquid waste management plan are eligible to be included in the city’s borrowing bylaw to go toward the construction of the plant.

“The chief administrative officer (CAO) was reviewing the cost escalation we have been facing over the last several months,” said Langenmaier. “With the cost pressures faced, I wanted to bring forward an amended bylaw that captures the maximum possible borrowing in our waste management plan. We can add about $3.4 million to our borrowing.”

Langenmaier said the cost, if approved, is already included in the city’s financial plan. He said it is a requirement when going to the provincial approving authority. He said he had included what the expected impact is.

“The annual debt servicing cost is an additional $166,000 a year, assuming a 30-year amortization period and a 2.5 per cent interest rate,” said Langenmaier. “We have the capacity under our liability servicing limit to take this on. A portion of that is helped by the payment of some short-term loans from the COVID-19 safe restart fund.

“The overall impact of this $3.4 million to the liability servicing limit is relatively small.”

Langenmaier said the process, if adopted, would go to third reading and then to the province for approval. He said it would take several weeks before the city hears back. Timelines are not restricted right now and the city has only borrowed $15 million of the $27 million borrowing authorization, according to Langenmaier.

“I have anticipated borrowing an additional $5 million in the fall of 2022 and we’ll see where it takes us into 2023 and 2024,” said Langenmaier.

Councillor George Doubt said the borrowing is a reasonable thing to do. He said council previously discussed the possibility of using the sewer reserve to cover some of the funding that might be necessary, which would have left the city’s reserve too low. He said the borrowing will help maintain reserves at a healthier level than they would otherwise be.

“With cost escalations and all of the challenges that we’ve heard, it’s good to be prepared,” said Doubt.

Borrowing provies flexibility, says CAO

Chief administrative officer Russell Brewer said the borrowing is to provide some extra room should it be needed for the plant.

“It would just give us more flexibility,” said Brewer. “This is picking up some of that authorized borrowing that’s built into the liquid waste management plan that wasn’t captured when we first came to you.”

Councillor Cindy Elliott said some funding for the project had come from provincial and federal governments. She asked if there is a system for going back to senior governments when actual expenditures are different, to get more funds.

Brewer said the city hopes that will be the case.

“We have gone to staff at the province, requesting more funding, but we’ve also since sent a letter from the mayor to the minister of municipal affairs requesting additional funding as well,” said Brewer. “The province and the federal government have provided $55 million, but they are quite clear in the contribution agreement that any expenses beyond the share of funding that they provide is to be borne by the city. Regardless, we are approaching the province, hopefully, for additional funding.”

According to a report from Langenmaier, four additional items are eligible to increase the authorized loan. This includes $150,000 for allowance of archaeological and geotechnical studies. There is $100,000 for allowance of outfall studies.

Connection of Wildwood service to the central system, valued at $1.9 million, is also factored. The final allocation will be for complete sewer separation in Townsite, for $1,271,000.

The committee approved that the matter be sent to council for consideration on February 17.