City of Powell River Council has authorized borrowing of up to $1.2 million from the Municipal Finance Authority for purchasing land held by Powell River Waterfront Development Corporation (PRWDC).
The matter was raised at the Thursday, June 6, city council meeting and passed unanimously with no discussion.
In addition to the borrowing, council authorized use of $68,961 from the city’s land sale reserve and $173,784 from the parkland reserve for purchase of the PRWDC land.
According to a staff report from chief financial officer Adam Langenmaier, PRWDC was established in 2003 by the city for the purpose of facilitating the development of the community’s waterfront.
In 2006, while developing a joint venture with Tla’amin Nation and Catalyst Paper Corporation, the city decided to use PRWDC as its shareholder in what eventually became PRSC Limited Partnership, according to Langenmaier. The limited partnership had taken ownership of approximately 800 acres of properties considered surplus to Catalyst’s operations in return for a $4.5 million secured mortgage.
Goals for the limited partnership were to attract investment in the portfolio of lands for the purposes of diversifying the local economy and creating new jobs and revenues. Langenmaier stated that while under creditor protection in 2012, Catalyst made an agreement with PRWDC and Tla’amin partners to sell its shares in the limited partnership and retire the mortgage for the sum of $3 million. The share transfer and mortgage retirement were completed in September 2014 and the limited partnership was restructured to include the PRWDC and Tla’amin interests, each holding 50 per cent. City of Powell River signed a loan guarantee for PRWDC’s share.
In September 2017, directors representing Tla’amin on the PRSC board proposed that shareholders discuss taking ownership of the remaining properties and dissolving the limited partnership. The properties were appraised and the partners agreed to a shareholder draw and to dissolve the partnership.
On August 31, 2018, PRWDC gained ownership of 182 acres of property, appraised at a value of $2.16 million, and Tla’amin gained ownership of 245.6 acres of land valued at $2.17 million.
Langenmaier stated that the expected loan balance held by PRWDC, which comes due at the end of August 2019, is $1,380,716. The loan estimation would carry annual interest payments of $30,000, and annual principal payments of $226,025, for an annual cost of $256,025 to pay the loan in five years, he added. Estimated cost of borrowing from the Municipal Finance Authority is 2.5 per cent.
For borrowing of five years or less, the city does not need to go to an elector approval process, such as a referendum, for approval. Paying off the loan will give the city ownership of the 182 acres of land.
As for the future of PRWDC, the city has not undertaken any initiative for its continuance or disbanding. Chief administrative officer Russell Brewer said this is something council will be considering under its strategic planning process.