PUBLIC SAFETY BUILDING MUNICIPAL SECURITY ISSUING RESOLUTION

RECOMMENDATION:

THAT Council approve borrowing from the Municipal Finance Authority of British Columbia, as part of the 2014 Spring Borrowing Session, five million, four hundred and ninety thousand dollars ($5,490,000) as authorized through Public Safety Building Loan Authorization Bylaw No. 839, 2012 and that the Capital Regional District be requested to consent to our borrowing over a 20 year term and include the borrowing in their Security Issuing Bylaw.

CHIEF ADMINISTRATIVE OFFICER’S COMMENTS:

I concur with the recommendation.

TIME CRITICAL:

The Municipal Finance Authority has two borrowing sessions per year. In order to borrow in the 2014 Spring session, a Municipal Security Issuing Resolution must be sent to the Capital Regional District by January 31, 2014.

BACKGROUND:

The Public Safety Building project is now well underway and it is anticipated that the full budget of $7,490,000 will be required. Of this, $5,490,000 is budgeted to come from debenture debt, $1,000,000 from a developer amenity contribution, and $1,000,000 from net proceeds from the sale of the current fire hall site.

Staff is currently reviewing the expected net proceeds from the sale of the current fire hall site. Any short fall will need to be funded internally, and may be funded by Casino revenue.

The potential use of reserve funds has been reviewed by staff. The Town currently has two reserves funds that can be applied to this project. This includes the Capital Works Reserve Fund and Fire Department Machinery and Equipment Depreciation Reserve. The Capital Works Reserve Fund shall be used only for the purposes of Capital Projects and any land, machinery, or equipment necessary therefore, including the extension or renewal of existing capital works. The Fire Department Machinery and Equipment Depreciation Reserve shall be expended solely for the purchase of Fire Department Machinery and Equipment.

The Craigflower Bridge replacement project is utilizing the Capital Works Reserve Fund. As a result, for 2014, the Capital Works Reserve Fund has an unallocated balance of $3,670.

The Fire Department Machinery and Equipment Depreciation Reserve fund has an unallocated balance of $210,527, not including the $1,000,000 that will be borrowed internally until it is repaid from the net proceeds from the sale of the current fire hall site. The unallocated projected balance for Casino Revenue is $342,008.

The use of Sewer Reserve Funds and Sewer Development Cost Charges are currently being reviewed to ease the cost of the CRD sewer treatment plant to taxpayers.

The 2014 Spring session will result in the town receiving the funds in April 2014. The Town has expended approximately $2,200,000 in 2013. Based on the current schedule, and discussions with the contractors, the 2014 burn rate is projected to be $800,000 per month, which will result in projected expenditures of $5,400,000 when the debenture funds are received. The Town will require the full $5,490,000 shortly after.

Should the Town choose to not participate in the 2014 Spring session there is a 2014 Fall session; however, it will result in an addition six months of interest, estimated at $50,000. The Town is currently borrowing funds at a daily interest rate of 1.72% through the Municipal Finance Authority.

The estimated lending rate for the 2014 Spring issue is 3.95%. At this time the exact rate has not been set. There has been a continued upward trend in lending rates and it is unknown what future interest rates may be.

RECOMMENDATION:

THAT Council approve borrowing from the Municipal Finance Authority of British Columbia, as part of the 2014 Spring Borrowing Session, five million, four hundred and ninety thousand dollars ($5,490,000) as authorized through Public Safety Building Loan Authorization Bylaw No. 839, 2012 and that the Capital Regional District be requested to consent to our borrowing over a 20 year term and include the borrowing in their Security Issuing Bylaw.

SUBMITTED BY: J. Beauchamp, Director of Finance

REVIEWED BY: K. Anema, Chief Administrative Officer