Council unanimously opted Monday to dip into the city's endowment reserve to the tune of nearly $2.5 million to pay for a long-awaited new entry to the Bob Harkins branch of the Prince George Public Library.
Staff had recommended borrowing the $2.472 million from the Municipal Finance Authority and paying it back over 20 years, but that would have meant winning voter assent through either a referendum or counterpetition.
And city manager Kathleen Soltis assured council taking the money out of the reserve will not create an imposition. She said it stands at a healthy $25 million and while staff is careful to avoid overusing the fund, which is also used to cover cash flow, "a project of this size wouldn't be detrimental to the balance from that reserve."
As with borrowing from the MFA, the money would also be paid back over 20 years. The interest rate would be three per cent, the estimated opportunity cost of not having the money available to invest in the MFA's intermediate fund, compared to four per cent if borrowed from the MFA. The debt servicing cost would be $166,157, compared to $190,877 if borrowing from the MFA.
An option of borrowing from the MFA and repaying it back over five years, which would also avoid the requirement of voter assent, was also presented to council.
But Soltis noted staff prefers to have the money repaid over the life of the asset because future generations will also be able to use it. She also noted the steep debt servicing cost - $516,869 for the first year and declining over the following years as the principal declines - "would have an impact on the tax levy."
Borrowing bylaws for two other major projects - a new Four Seasons Pool and a new Fire Hall No. 1 - are expected to go to referendum this spring. Cost of the new pool is estimated at $33 million and the new fire hall $15 million.
Mayor Lyn Hall said a new entrance for the library has been a long time coming and, along with the Marriott hotel, will amount to a finishing touch on the work going on in the vicinity of Canada Games Plaza.
"We're going to see an area that is fully completed for lots of entertainment...it's a hub for the Civic Centre, the hotels in the area, the museum, Two Rivers Gallery so on and on," Hall said. "It's going to be a very nice location."
