Local governments need to be encouraged to do more innovative solutions like this. We need to see a lot more P3s as well. We have to get out of 1950s thinking and move into the 21st century when it comes to public infrastructure.
Here is the article from the Goldstream News Gazette
Langford OKs private loan for interchange
By Edward Hill - Goldstream News Gazette
Published: July 29, 2008 1:00 PM
Updated: July 29, 2008 5:05 PM
City shuns municipal lending authority
Langford gave the nod to bylaws to borrow up to $9.75 million to finance the Spencer Road Interchange and to recoup the money from Skirt Mountain landowners.
The City has an agreement with TD Canada Trust to borrow $9.75 million at less than four per cent interest, a better rate than with the Municipal Finance Authority, said Mayor Stew Young. The MFA traditionally loans money to municipalities at lower interest rates than banks.
“(Borrowing from the bank) is a better deal. We’ll save $200,000 or $300,000,” Young said. “It works out not too bad.”
Young had a public spat with MFA chair Mayor Frank Leonard, the mayor of Saanich, in March after the authority requested the City secure a loan with a $5 million letter of credit.
Young denounced the condition as outright political interference. Leonard said the MFA is extremely risk-adverse and the loan request was unusual.
Swearing off the MFA, Langford sought loans from private lenders. City is still trying to move an outstanding $10-million loan for sewers away from the MFA to TD Bank.
“There are no weird conditions or political interference (with the interchange loan),” Young said. “Other municipalities should shop around and do the same thing.”
The City also has a signed deal with five Skirt Mountain property owners, Langford officials confirmed.
Bear Mountain, Totangi Forestry, Goldstream Heights, Clara Kramer and Bear Mountain Parkway Estates will borrow $9.75 million to finance their portion of the interchange while paying back Langford’s share.
Repayment is based on the City taxing 32 land parcels covering 182 hectares on Skirt Mountain, under a local area service agreement. Langford said the deal is backed by $135 million in the Skirt Mountain property.
Clerk administrator Rob Buchan said the City’s intent is to pay the loan back as quickly as possible.
“As development occurs, it will pay down the loan,” he said.
The interchange, Langford’s largest public works project in its history, is expected to cost about $25 million, which includes $2.5 million from development cost charges and $4.9 million from the province. It is expected to be finished late next year.