The District of Squamish will soon seek residents’ approval to borrow $8 million to refinance the current Squamish Oceanfront Development Corporation loans.
With the refinancing, the district will be able to implement financing that is more favourable to the district in the remaining time before the pending sale of the 60-acre Oceanfront Lands, the district general manager of financial services, Joanne Greenlees, told council on March 3.
“This is something we probably should have done awhile ago and it is a prudent step forward,” said Mayor Patricia Heintzman. “It is not borrowing new money, it’s restructuring current debt in a way that is more responsible and more responsive. It is better for the taxpayers in the long run.”
Council unanimously passed all three readings of the loan authorization bylaw at the meeting on March 3. The district now must enter the Alternative Approval Process (AAP), which will involve putting the loan authorization to the public.
“If folks are opposed, they may come into municipal hall and sign a petition saying they do not agree with the loan authori-zation bylaw. If there are sufficient petitioners –I believe it requires 15 per cent of the electorate – then the question fails,” Greenlees told The Squamish Chief.
Currently, the SODC is in negotiations to conclude the sale of the Oceanfront Lands.
In August 2014, the District of Squamish, Matthews Southwest (MSW) and Bethel Lands Corp. came to the final purchase and sale agreement on waterfront property.
“Refinancing SODC’s current debt structure by borrowing is considered the best option and is recommended to provide assurances that the district can meet its full obligation with respect to the loan guarantee without inordinately raising taxes in the short term, or alternately disposing of assets,” Greenlees said, reading from the district’s report to council.
All district loan authorizations require public assent. There are two ways of obtaining elector assent: One is by referendum, which is very costly and time consuming, Greenlees said, the other is by the AAP.
“If the question fails, then council may choose to go to referendum or find an alternative to borrowing the money to refinance SODC,” she said.
SODC currently has private financing with securities from the District of Squamish that includes an $8 million loan guarantee and a mortgage on the Oceanfront property, to a maximum financing of $11 million, Greenlees said.
While waiting for the close of the Oceanfront sale, the District of Squamish had to make the first $3 million loan payment in May of 2014.
“The district facilitated that by borrowing from our reserves and lending to SODC under a repurposing agreement in order to make that first payment,” said Greenlees.
There are two more payments, $3 million due this May and $5 million in May of 2016.
The district is prepared to make the loan payment in May of this year by borrowing from reserves if required, said Greenlees.
Because negotiations are still ongoing, it is possible the sale may not go through this spring as was originally forecast, according to Greenlees. If the proposed refinancing receives public assent, the upcoming May payment may be delayed and the new refinanced monies used instead of drawing from reserves, she said.
District staff will seek council’s approval to proceed with the AAP process as soon as it receives statutory approval from the Inspector of Municipalities, expected in about three weeks.
The AAP process must allow at least 30 days for the public to petition.
