Councilors for the City of Powell River will vote on whether to hold a referendum for a new fire station/emergency services facility during the October municipal ballot.
At the Finance Committee meeting on March 24, three recommendations were presented to councilors to set the process in motion. The first is that the fire station borrowing authorization by-law be read three times and referred to the municipal inspector for approval.
The second is for a referendum question, which reads: Are you in favor of the City of Powell River enacting the Fire Hall Borrowing Authorization By-law to authorize the borrowing of an amount not not exceeding $7.5 million over a maximum period of 20 years for the purpose of constructing a new fire hall at 7160 Duncan Street?
The third recommendation is to direct staff to include a $7.5 million fire station project in the 2022-2025 financial plan for the year 2025.
At the finance committee meeting, chief financial officer Adam Langenmaier said staff had been tasked with bringing back a loan authorization regulation.
“What needs to be done is to establish a by-law, pass it through three first readings and then send it to the municipal inspector for approval; the settlement so far is $7.5 million, as stated,” Langenmaier said. “We can define how long we want this loan to be. I have a chart that describes a 10, 20, and 30 year scenario. My recommendation is that the board consider and adopt a 20 year term for this loan.
Langenmaier said the 10-year term makes the annual payment too high. He said there is an interest savings to be paid, but it will put financial pressure on the city to come up with an annual debt servicing cost of $883,000 for 10 years.
“Expanding that period to 20 years, our annual payments come to $507,000,” Langenmaier said. “With another debt coming due, we’ll probably be able to transition with reasonable ease to repaying that one. If we move to a 30-year term, the amount of interest you pay starts to become very important.
“We will have further 30-year loans from the sewage treatment plant, which is why I recommend that a 20-year life should be considered and adopted, because it achieves this balance.
Langenmaier said that if the interest rate is 3%, the total interest payable will be $4.5 million on a 20-year loan of $7.5 million.
As for the city’s debt service limit, the city still has room to take on that debt, Langenmaier said, adding that the city would go from 37% debt service utilization to 40%. .
“We are okay with the amount of debt we have and it will not push us to the highest rank among our provincial peers,” he added.
Langenmaier said the bylaw must be approved by voters and therefore must be put to a referendum if the council gives direction.
Chief Executive Russell Brewer said that due to the Municipalities Inspector’s preferred schedule, the first three readings of the fire station by-law will likely go to council in June.
The Finance Committee has given unanimous consent to send the first two recommendations to City Council at the appropriate time, and this direction could be given to staff to include the third recommendation in the five-year financial plan.