Squamish council is handing off questions surrounding the Squamish Oceanfront Development Corp.'s (SODC) debt to its successors.
On Tuesday (Oct. 25), a shrunken council voted to defer a District of Squamish staff recommendation to eliminate its current $9 million loan guarantee for SODC's borrowing from Scotia Bank.
Unbeknownst at the time of the loan guarantee approval, under the Community Charter the municipality's borrowing power is based on its ability to service its overall liabilities, including loan guarantees. Legislation mandates that a municipality can borrow up to 25 per cent of its tax revenue - a figure district staff recommended should sit at 20 per cent.
The $9 million loan guarantee increases the district's liability servicing requirements each year in the five-year term, to the point that by 2014, it eliminates the possibility of any further borrowing.
By borrowing the $9 million over 20 years, the district would be able to eliminate the loan-guarantee constraints and free up room for additional borrowing.
The motion landed on council's table after the appointment of a new SODC board (see related article). As such, newly elected directors Mayor Greg Gardner and Coun. Paul Lalli excluded themselves from the vote because of conflict of interest. So too did Coun. Rob Kirkham, who works for Scotia Bank.
Coun. Corrine Lonsdale said she was surprised to see the item on council's agenda. Backed by the remaining councillors - Bryan Raiser, Patricia Heintzman and Doug Race - she said the topic would be better dealt with if it came before a full council. Council voted to postpone the recommendation until after the Nov. 19 election.
SODC chair Bill McNeney said the decision gives the newly appointed SODC board time to look at the debt issue. The board's strategy will determine the financial structure moving forward, he noted.
"I think they did the right thing by saying we are going to defer this until the new board has a chance to propose a financial plan," he said.
Any municipal debt amortization beyond five years goes before the public, CAO Kevin Ramsay said. This can be accomplished either of two public engagement processes - by referendum or an alternative approval process, in which residents send in their opposition to city hall.
"You can do any short-term borrowing under five years," Ramsay said. "If it is over five years, then you need to go to the electorate."
