City of Powell River Council has authorized borrowing of another $5 million for the consolidated wastewater treatment plant.
At the June 17 city council meeting, councillor George Doubt moved a recommendation that council approves long-term borrowing from the Municipal Finance Authority of British Columbia as part of the fall 2021 borrowing session, in the amount of $5 million, as authorized through the liquid waste treatment plant loan authorization bylaw from 2019, for the borrowing of funds to construct the plant.
The recommendation also included that qathet Regional District (qRD) be requested to consent to the city borrowing these funds over a 30-year term, and that qRD includes the borrowing in its security issuing bylaw.
Doubt said the resolution was to add $5 million to the funds the city will borrow for preparation of the plant.
“The construction of that is moving along and we are going to need those funds to pay for construction,” said Doubt. “It’s an opportunity to borrow those funds from the municipal finance authority. All borrowing through the municipal finance authority is done through the regional district, which is why we need to go through that process. The regional district borrows directly from the municipal finance authority and they basically guarantee the loan.”
Doubt said the liquid waste treatment plant loan authorization bylaw in 2019 specified the total amount that could be borrowed and the recommendation before council was taking a portion of that cash out now to use in the construction.
According to a report from city chief financial officer Adam Langenmaier, on March 26, 2020, the city received $10 million in borrowing from the municipal finance authority spring 2020 debt issue. The report stated that the city is authorized to borrow up to $27,280,000 from the municipal finance authority for construction of the plant.
“The city can access funding as required by entering into long-term borrowing contracts with the municipal finance authority,” stated Langenmaier. “These contracts are subject to fixed interest rates provided by the municipal finance authority and are also subject to what the interest rate environment is doing at the time of issue.”
The remaining borrowing authorized under the bylaw is $12,280,000.
Langenmaier stated that to ensure smooth construction, the city should have adequate cash on hand to pay construction expenses as they are incurred. He stated that grant claims can be made as construction and expenditures are incurred, however, this means the city must pay construction costs upfront and then make claims for reimbursement through the provincial and federal governments, which are also funding the project.
“The city should ensure adequate cash on hand to absorb construction costs prior to grant claims being approved,” stated Langenmaier. “By doing this, the city can ensure the project will not be delayed due to cashflow issues.”
