Earlier this month city council put the new library entrance project on the books.
Tonight it will look at three different ways to fund the $2.4 million project.
The options preferred by city staff is to fund the project through the Municipal Finance Authority.
The proposed term for the loan would be 20 years. With a project completion date of 2019, it is assumed the borrowing of the $2,472,000 would take place in the spring of 2020 with a proposed term of 20 years, resulting in annual debt servicing costs of $190,877 to the General Operating Fund. This assumes payments would start in October of 2020 and that the debt would have an interest rate of four per cent and a sinking fund rate of three per cent
Elector assent would be required for this alternative, which means council must either put the matter to a referendum or use the alternative approval process.
The second option is short-term borrowing (five-year term). Borrowing $2.4 million would result in debt servicing costs for the first year of $516,869. Those costs would decline as the principal balance is reduced.
The third option is internal debt funding, using the city’s endowment reserve, which is traditionally used by the city to manage its cash flow and helps prevent the city from borrowing money prior to taxes being collected in June and July.