County loans cash to help fund new fire hall

BY KIRK STARRATT

The Advertiser

NovaNewsNow.com

The Berwick Fire Commission will receive a helping hand from the County of Kings to fund construction of the new fire hall in Berwick.

Kings County councillors voted unanimously in favour of approving the loan at the August session. This is the first instance of council approving such a loan to a fire commission.

Corporate Services director Bill McKennan said representatives of the fire commission approached municipal staff earlier this year about entering into a financial agreement for the new hall. The fire commission wants the county to provide a loan with a guaranteed financing rate and prepayment privileges over the term of the borrowing, a maximum of 20 years.

“Half of Berwick’s fire area rate is for the building of a new hall and it has been for a number of years,” McKennan said, pointing out that if the fire commission were to default on the loan, the county could recoup the money through the retention of area rate funds.

The fire commission requested a study in 2002 that identified 60 building and safety code violations with their hall that could affect the delivery of efficient fire services. A subsequent study in 2003 recommended the construction of a new fire hall at a new site.

A property on Commercial Street in Berwick was purchased in January 2007. The new hall will be 18,000 square feet, including a six-bay unit for trucks, storage of equipment and an administrative block. The total estimated cost is $2 million.

The new hall is a joint project of the fire commission and the Town of Berwick. The town has secured a temporary borrowing resolution and has budgeted the full cost of the hall. The fire commission is responsible for 50 per cent of the costs and will be billed by the town.

$800,000 loan required

The fire commission had spent $70,484.50 on the new hall as of May 22, 2007. McKennan said during his presentation to county council at the August session that the commission currently has $258,281.96 available for hall construction costs, including their 2007 tax levy. He said the analysis presented in his report to council assumes that the fire commission would require a loan of $800,000 ($1 million less $200,000 in existing revenues).

McKennan said three options were explored with the fire commission, including a direct loan through the Municipal Finance Corporation; a direct loan through a financial institution; or a direct loan from the County of Kings. The third option was chosen.

McKennan said the fire commission would borrow the money directly from the municipality at a fixed interest rate of 5.1 per cent. This interest rate is based on the current investment return for the municipality and would cover the administrative costs of the loan agreement. The commission would have the option of paying the loan before the agreed maturity date using balloon payments.

He said this option would result in a total payment of $1,294,789.97, broken down into yearly payments of $64,739.49, not taking into account possible balloon payments or changing interest rates. McKennan said, given the current area rate of eight cents per every $100 of assessed property value, the commission could potentially repay the loan within 10-15 years.

Councillor Madonna Spinazola moved to refer the matter to the September committee of the whole (COTW) session for a full council discussion, even though staff had provided two detailed updates to the executive committee on the contents of McKennan’s report. However, the motion was defeated. Spinazola said she doesn’t feel that the correct process was followed and the issue should’ve gone to the COTW.

Councillor Chris Parker said, even if the matter went through the executive committee, it should have still come to the COTW for a full debate and he would like to see similar matters handled that way in the future.