City council will consider options Monday night for financing the new entrance to the Bob Harkins branch of the Prince George Public Library.
In a report, staff is recommending the city borrow the $2.472 million from the Municipal Finance Authority and pay it back over 20 years.
Taking that route would generate $190,877 in debt servicing costs, assuming a four-per-cent interest rate, a sinking fund rate of three per cent and payments starting in October 2020.
It would also require taxpayers' approval via either a referendum or counterpetition.
Also known as a "negative vote," a counterpetition that draws signatures against borrowing the money from 10 per cent of the electorate would force council to either nix the proposal or take it to a full-blown, and more costly to administer, referendum, where a majority either way would decided the proposal's fate.
Two other options will also be presented to council:
Repay the money over five years.
This would not require voter assent under the Community Charter because the term would not exceed five years, but would lead to debt servicing costs of $516,869 for the first year. The amount would decline over the following years as the principal declines.
The option assumes a 1.5-per-cent interest rate. As of Feb. 7, the rate stood at 1.44 per cent.
"Borrow internally" by taking the money out of the city's endowment reserve and pay it back over 20 years.
This also would not require voter assent but it assumes an interest rate of three per cent, the estimated opportunity cost of not having the money available to invest in the MFA's intermediate fund. The debt servicing cost would be $166,157.
