KENILWORTH – Council passed a bylaw authorizing CAO Mike Givens to sign the agreement with the Federation of Canadian Municipalities for the combined loan and grant to upgrade the Arthur wastewater treatment plant.
The investment consists of a $5 million loan and a $750,000 grant from the FCM’s Green Municipal Fund.
Executing the agreement insures the township receives the investment and suggests outlines for the amortization of the loan.
According to the report on the agreement by township finance director Adam McNabb, the interest on the $5 million loan will be calculated at an annual rate that matches either the Government of Canada 10-year benchmark bond yield plus one per cent per annum, which is currently at 2.34%, or 3.65%.
McNabb said it is likely the 3.65% was stipulated in the contract agreement by FCM based on current market conditions.
Whichever rate is higher when a borrowing bylaw is passed at a yet undetermined date, will be the set rate.
The principal amount of the loan will be paid semi-annually.
“Annual payments under a five-year amortization regime would be $1,103,096.50, and $601,287.78 under a 10-year plan – if the interest rate is 3.65%,” read the report.
At the Dec. 3 council meeting Mayor Andy Lennox asked whether the amortization can only be up to 10 years.
“No, it is incumbent upon this council to establish the length and duration of the loan. That report will be forthcoming once we have some direction around the 2019 budget … within the Municipal Act, I believe we can establish debt up to a maximum of 40 years,” explained McNabb.
Additionally, the township will receive the $750,000 in two instalments: the first on the loan disbursement date, June 30, 2021; the second on or prior to June 30, 2022.
The anticipated completion date for the Arthur wastewater treatment plant upgrades is the end of 2025.