City council is looking to land a $1 million loan from Columbia Basin Trust (Trust).
The money would be interest-free for 20 years and used to pay down the new terminal building at the Trail Regional Airport, which is slated to open mid-November.
Three readings were given to the loan authorization bylaw during Monday night council, so the next steps are to advance it through the Alternative Approval Process (AAP).
“A bylaw, that if adopted, would authorize the city to borrow $1 million over 20 years to help finance the costs associated with the airport terminal project,” stated Chief Administrative Officer David Perehudoff.
In order to advance the bylaw through to adoption, council agreed for staff to continue the legislative work, which includes seeking approval from the Ministry of Municipal Affairs. After that, the city is required to notify the public before seeking electorate assent through an AAP or counter-petition process.
The Airport Terminal Building (ATB) project was included in the 2018 Capital Budget following the receipt of a $1.18 million B.C. Air Access Grant to defray the total cost of the ATB and associated improvements totalling $4.12 million.
“As part of the Financial Plan adopted, the ATB costs and associated funding were included within the general capital fund, with $1 million funding to come from long-term debt,” Perehudoff said.
“The loan authorization bylaw brought forward is therefore consistent with the budget and the plan adopted by city council.”
Notwithstanding the city’s ability to borrow conventionally, an opportunity became available whereby the Trust agreed to provide Trail with an interest free loan in support of the project, Perehudoff confirmed.
“The city sought clarification from the province with respect to borrowing money on a long-term basis from Columbia Basin Trust as opposed to using the conventional approach through the Municipal Finance Authority (MFA),” he explained.
“And based on the final discussions, (the city) now is confident that this loan can be facilitated.”
The interest-free aspect of the Trust loan creates a financial advantage, Perehudoff reasoned.
“Rather than borrowing the money conventionally through the MFA, the city is able to secure interest free money,” he noted.
“It is estimated that this will result in a direct savings of $630,000 in interest payments.”
Additionally, proceeding with the loan eliminates the need for the city to draw $1 million from prior years’ surplus.
Perehudoff added, “Which strengthens financial capacity should other contingencies or issues arise where internal funding is required and potentially the only funding source.”