A conditional purchase of land could end up costing Saanich just over $2 million dollars in interest for a $4 million dollar loan towards that land purchase.
Valla Tinney, Saanich’s director of finance, told the public that the municipality could pay about $2 million dollars in interest for a $4-million loan over its duration of 30 years.
The public heard this figure following a question from Coun. Judy Brownoff as council was preparing to read a temporary borrowing bylaw three times.
The money would help the municipality purchase a 2.2-hectare parcel of land between Kings Road and Haultain Street that BC Hydro deems surplus. Saanich last week announced that it had reached a conditional agreement with the Crown agency to pay $5.5 million for the land. Saanich plans to cover the outstanding balance by tapping into its reserve fund.
Saanich officials, starting with Mayor Fred Haynes, identified purchase of the land as priority as a community group has lobbied Saanich to purchase the land for the purpose of turning into a park. While Saanich has not yet announced plans for the property, last week’s purchase option opens the path to that outcome.
This said, it also announced plans to sell portions of the land, if it cannot raise $2.75 million in funding from other sources, including other local governments, community associations and organizations and residents.
This proviso in the pending purchase of the land could end up changing Saanich’s future interest obligations.
Pending approval of the borrowing bylaw, Saanich has some flexibility, said Tinney in response to a question from Coun. Karen Harper, who wondered whether Saanich could pay the debt off early.
“What we are doing is entering into temporary borrowing while the fund-raising portion of this project goes forward,” she said. “Once we know exactly how much [money] needs to be borrowed, we would be locked in for long-term borrowing at that time. So we have five years from when this bylaw, if it is passed, to bring on long-term debt. So there is some time to figure this out.”
Saanich scheduled final reading of the borrowing bylaw for next week. That is also when it could confirm the transfer of $1.5 million towards the project.