The City of Prince George is going ahead with a borrowing plan to pay for the new RCMP detachment slated for the corner of Fourth Avenue and Victoria Street.
During Monday's meeting, council approved $25 million in temporary borrowing to allow the city to begin construction of the $38.9 million project.
City director of public safety and civic facilities Rob Whitwham said bidding on the contract to demolish the former bingo hall currently on the site closes today.
"With respect to the construction tender itself, we could be going to tender by mid-May," Whitwham said. "We're hoping to have a tender in front of council by mid-June."
The city will temporarily borrow the $25 million at 1.7 per cent interest from the Municipal Finance Authority, city finance manager Sandra Stibrany said.
Once the project is complete, the city will get a 20-year debenture loan for the total cost from the finance authority.
The current interest rate for debenture loans is just over 3.5 per cent, she said. The finance authority provides 10-year fixed rate debenture loans to municipalities.
Once the city takes a debenture loan, it must begin payments on the interest and principal immediately, she said.
The estimated annual payments on $25 million come to $2.8 million per year, at five per cent interest.
For the duration of the temporary loans, the city will only make interest payments on the debt, Stibrany said - at a cost of $360,000 for the remainder of 2011.
The city will pay off some of its long-term debt in 2013 and 2014, she added, reducing its debt repayment by $517,000 per year.
That will result in a smaller tax increase to cover the increased debt repayment, Stibrany said.
