City of Powell River Council will consider purchasing all of Powell River Waterfront Development Corporation (PRWDC) lands for nearly $1.4 million.
At the Tuesday, April 16, committee of the whole meeting, city director of economic development and communications Scott Randolph said the city guaranteed a loan on behalf of PRWDC to purchase half of Catalyst Paper Corporation’s shares in PRSC Limited Partnership in 2014.
“The loan guarantee can only last five years and it is not appropriate for the city to extend the guarantee or enter a new guarantee on behalf of PRWDC,” said Randolph.
The guarantee is set to expire August 31, 2019.
“As of September 1, 2019, it is estimated PRWDC will owe a little more than $1.38 million on the loan held by the First Credit Union, assuming no principal payments are made from today until expiry,” he added.
On August 31, 2018, PRWDC gained ownership of two properties, one known as the former golf course lands, which is 80 acres, and the other a property on the northern edge of the community which borders Tla’amin Nation, which is roughly 100 acres in size and is segregated by the city’s sewage lagoon in Wildwood. This happened through the process of dissolving PRSC Limited Partnership with Tla’amin.
Randolph said on December 11, 2019, PRWDC entered into a sales contract with Sino Bright Investments to sell 10 acres of the golf course lands for development of an international school campus and accommodations. In March 2019, Sino Bright and PRWDC agreed to extinguish the purchase agreement.
“With that agreement being extinguished, staff believe it is now time for the city to purchase the PRWDC properties in order to address a couple of different matters,” said Randolph. “One is based on the public feedback that was received about the proposed sale to Sino Bright. It is believed it may be better that the city own the properties in order to provide more direction over future development. The other reason, of course, is the city needs to address the issue of the loan guarantee prior to August 31 of this year.”
The loan guarantee is the most pressing issue for PRWDC. The first option is for the city to purchase all of the land from PRWDC, thus providing cash to pay out the loan that it owes, and that would result in the city’s guarantee ending. The city could access short-term borrowing from the Municipal Finance Authority (MFA) without electoral approval as the borrowing would be completed within five years. Longer than five years requires public approval such as through a referendum.
The second option is to provide PRWDC with cash to pay out the loan. This would extinguish the city’s guarantee but the funding could not come from the MFA because there are restrictions on borrowing money to give away without receiving an asset in return. The money would have to come from the city’s own pocket.
The third option is to create a new guarantee for PRWDC. The city could enter into a new agreement with the corporation to guarantee a new loan to allow PRWDC to continue as currently arranged.
Randolph said after evaluating the options, staff believes the best path forward is for the city to undertake short-term borrowing, no longer than five years, from the MFA to purchase the properties.
City chief financial officer Adam Langenmaier said for the proposed loan from the MFA, the balance would be about $1.4 million and the current variable interest rate is 2.47 per cent. His report showed annual interest charges of nearly $36,000 and annual principal and interest charges to pay off in five years of nearly $299,000.
“It is the staff recommendation that council consider purchasing the land, extinguishing the loan guarantee that will be expiring at the end of August and settling this matter,” said Langenmaier.
Randolph outlined there would be a communications strategy if council accepts the purchase option.
Councillor Jim Palm said if council chooses the option to purchase the properties, the city will have control over the lands.
“It’s always better to be land rich than land poor,” said Palm.
Councillor CaroleAnn Leishman said if council is to become the owner of the properties there should be a broad public engagement process. Councillor Cindy Elliott also favoured comprehensive public engagement and updates to the official community plan.
Councillor Maggie Hathaway asked if the city has made application to take the lands out of section 21, the industrial lands designation in the city’s incorporation act.
Chief administrative officer Russell Brewer said the city had made application four years ago and was turned down. Brewer said staff will bring forward another report to go ahead and make application again. Hathaway said if the designation remains it restricts the use of the property.
Councillor George Doubt said it is clear from what he hears from the public that it would prefer the land ownership to be in the city’s hands. He agrees with the notion that there needs to be public involvement in the official community plan and future uses of this land.
“We need to think long and hard about what’s going to happen to that land in the future,” said Doubt.
Hathaway said she did not think council had a choice with regard to the purchase of the properties.
“We’ve guaranteed the loan, so we either pay it off and leave the land with the PRWDC or we pay the loan and we own the land ourselves,” said Hathaway. “It’s going to cost $300,000 a year. I don’t think we have any wiggle room there. There is no other choice.”
The matter will be referred to the May 2 city council meeting.
PRWDC president Wayne Brewer said his board passed a motion earlier this year recommending that council purchase the property.
“In other words, the PRWDC board is fully behind this proposal,” he added. “It makes so much sense to do this. We have good, competent staff working for city, and our volunteer board has accomplished much, working together with Tla’amin citizens on PRSC to bring us to this point.”
Wayne said the city would be acquiring assets worth far more than it has cost.