Town of Pincher Creek council agreed to committing to a 30-year repayment plan on a $2-million loan being taken to pay for the two new early learning centres during the Monday, July 27 council meeting.
In a unanimous vote in favour, council agreed that the 30-year plan would provide more flexibility in the long-term, especially during times of economic uncertainty.
Councillor Mark Barber said the conditions of repayment also made the 30-year plan appealing.
“I understand that the loan can be paid back in full at any time, so the 30-year term might be very valuable to us as when we consider our challenges in the future,” said Barber.
“The buildings are probably good for 50 years, and at this point there’s no problem at all with going with 30 years,” he said.
He said financial circumstances made the 30-year plan seem like a better option than a 15-year plan.
“Under normal circumstances in a non-COVID world I would normally recommend the 15 years too, but we just don’t know what the future holds at this point,” he said.
“Our hopes are that the project will be at least revenue neutral for us.”
Councillor Brian McGillivray said the 2.27 per cent interest rate on a 30-year plan would give the Town more financial flexibility in coming years.
Brian: “the $2-million at the interest rates is very attractive, and over a 30-year term gives us some breathing room. Then we can decide what we want to do,” he said.
Council also discussed the use of the Municipal Sustainability Initiative (MSI) grant that was received to go towards the project, and decided it would be best to use the full amount of the grant, even if money was left over from the loan.
Mayor Don Anderberg said he was concerned that not using the MSI could mean jeopardizing future chances at receiving the grant.
“One of the criteria that we talked about that I’m a little bit concerned about now is if we don’t use this MSI funding, are we going to have any MSI funding next year, or lose it all,” said Anderberg.
“At the stroke of a pen our MSI money is gone, so would you rather use it or cross your fingers and hope it’s there later on?”
McGillivray said having funds left over from the loan could help in coming years.
“We may need every penny of it,” he said.
Anderberg said the option to repay the full amount of the loan at any time was an asset compared to other debt options.
“The good thing about the financing that (Catonio) was able to find for us, a regular government debenture you’d be tied into this for 30 years. This one, we can actually pay it off when we want to,” said Anderberg.
“That makes the decision making a little bit easier, and I agree with council’s direction on this—just seeing where we’re going to end up in the near future. Conserving whatever cash we can is a reasonable approach at this time.”