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City corporation needs more funds

Staff recommend extending five-year shareholder loan

A City of Powell River corporation needs more money to continue operating.

Ann Nelson, president of Powell River Waterfront Development Corporation (PRWDC), has written two letters to the city requesting an extension of a $51,000 loan and an additional $12,000 loan.

Along with Tla’Amin (Sliammon) First Nation and Catalyst Paper Corporation, PRWDC is one of three partners of PRSC Land Developments Ltd. The city is the sole shareholder of PRWDC. In 2007, council appointed Nelson, Owen Roberts and Dave Douglas, the city’s director of financial services, as PRWDC directors. Directors vote on executive positions.

In July 2006, council authorized the city to enter into a shareholder loan agreement with PRWDC for $51,000. These funds were for PRWDC to invest in PRSC. In 2008, council authorized the city to enter into another shareholder loan agreement for $12,000. These funds were needed to pay the costs of financial review, legal and bank fees.

PRWDC has asked for an extension of the $51,000 loan. Douglas recommended council approve the loan, which is to be paid back in five years, plus interest.

As well, PRWDC has asked for an additional $12,000. Douglas explained, in a report to council, that it requires the funds to operate and to meet minimal legal requirements. “The company must file appropriate reports to the provincial [and] federal governments and a financial review must be carried out annually,” Douglas wrote. “If the minimum legal requirements are not met, the company can be struck from the company register.”

Any revenues that PRWDC would obtain will come from PRSC, Douglas also wrote, and any repayment of loans to the city from PRWDC would come from revenues. He also stated the $12,000 would be enough for PRWDC to operate for three years.

PRSC was formed in 2006 and Catalyst sold it 325 hectares (805 acres) of land the company did not require for local mill operations. Catalyst gave PRSC a five-year mortgage of $4.5 million.

PRSC entered into a fee-for-service contract with Powell River Regional Eco-nomic Development Society (PRREDS), to manage the company.

Scott Randolph, PRREDS’ manager, told the Peak the expiry date of the mortgage was December 2011 and Catalyst has extended it for four more years.

PRSC has sold five parcels of land, Randolph said. Under the mortgage agreement, 60 per cent of the sale price is applied to the mortgage, he added. “The residual goes to the operating costs for the partnership,” he said. “Because we have sufficient operating funds, all the revenues from the last two sales have gone to pay down the mortgage.”

City council is expected to vote on the shareholder loan agreements at its September 15 meeting.