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Council continues reserve funds transfer

Majority approves initial readings

City of Powell River council continued its plan of transferring membrane reserve funds at a special meeting on Thursday, June 27.

Council passed the initial readings of a bylaw that transfers $1.1 million from the sewer fund treatment plant membrane reserve to the economic development capital reserve fund. After rescinding third reading of a bylaw that transfers $400,000 from the sewer fund treatment plant equipment reserve to the economic development capital reserve fund, it passed an amendment to the bylaw that adds new clauses, which were also added to the membrane reserve bylaw. The amendments state, in part, that there is money in the sewer fund treatment plant equipment reserve that “is not currently required for the purposes of the fund.”

Council is proposing to loan the $1.5 million to the Powell River Waterfront Development Corporation (PRWDC), a city owned company that is a partner in PRSC Partnership Ltd., to purchase half the PRSC shares owned by Catalyst Paper Corporation. Tla’amin (Sliammon) First Nation, also a partner in PRSC, will purchase the other half of Catalyst’s shares. Catalyst has agreed to retire the $4.6-million mortgage on land owned by PRSC for $3 million. The city and Tla’amin will be 50-50 partners in PRSC once the transaction is completed.

Councillors Russell Brewer and Maggie Hathaway voted in opposition to the resolutions involving the bylaws.

Hathaway said that council had received legal advice at an in-camera meeting and she wanted to release a summary of that advice. “I want the public to rest assured that we’ve done our due diligence and that we received legal advice,” she said.

Marie Claxton, city clerk, pointed out that the bylaws were receiving initial readings and council could consider releasing the legal advice at the July 4 council meeting, when the bylaws are expected to be adopted. “I can report to council that the mechanism that is in front of you has been vetted by our legal counsel,” Claxton said. “The bylaws have actually been prepared by legal counsel, so I don’t know if that will alleviate some of the uncertainty.”

Hathaway also asked how much it would cost the city to borrow the funds instead of using reserve funds.

Dave Douglas, the city’s director of financial services, estimated interest payments would be roughly $27,000 a year on a five-year loan.

Douglas emphasized that a section of the Community Charter states that money in a reserve fund established for a capital purpose that is not currently required for that purpose may be used for another purpose. “There’s an obligation to pay it back, to the original reserve fund,” Douglas said. “We’re not saying that the money there is so great we’re never going to use it. What we’re doing is saying we don’t need to use it today, so we’re going to lend it to another capital reserve fund.”

The expectation is that the loan to PRWDC will be paid back in five years, Douglas added, or when it’s required.

At the June 20 council meeting, councillors approved spending $920,000 to replace half the membranes in the Westview wastewater treatment plant, with the funds coming from the membrane reserve. Douglas said if the city determines in three years that the other 50 per cent of the membranes needed to be replaced and it needed money for that, the city would require PRWDC to pay back the reserve. “We’re not extinguishing the reserve because it’s greater than we’ll ever need,” he said. “We’re just saying that it’s greater than we need today, so we’re going to move it to another capital reserve fund.”

The money will be paid back to the reserve funds with interest equivalent to the amount it would have earned had it remained in the reserve fund.