The City of Yorkton is about to borrow $6.2 million for Re-Construction and Underground Utility Replacement on Dracup Avenue from Broadway Street to York Road.
“In April Council authorized Administration to advertise and request financing proposals to borrow $6,200,000 over 10 years to fund the re-construction and underground utility replacement on Dracup Avenue from Broadway Street to York Road,” Shannon Bell, Director of
Finance with the City told the regular meeting of Yorkton Council Monday.
Proposals have been received from TD, Scotiabank, BMO, RBC & Cornerstone Credit Union. All proposals involved amortizing the loan over 10 years.
Bell noted the RBC rates were SWAP rates, with all of the other loans are typical term loans with fixed rates.
SWAPS are a complex financial instrument where a Bankers Acceptance Loan (BA) is combined with an Interest Rate Swap.
After reviewing specific figures within each proposal, Bell said Administration had a single recommendation.
“As Administration believes there can be too many fluctuations and uncertainties regarding the BA loans being proposed by RBC, we will be recommending that Council chooses TD as the provider for financing $6,200,000. Administration also believes, even though
rates have been decreasing over the past number of years, that we may be at a point where rates could start coming back due to the current and projected economic state. The 10 year term rate of 2.25 per cent is a great rate and provides the City with consistency in payments over the next 10 years,” she told Council.
The loan will require bi-annual payments totalling just shy of $700,000, and the loan will incur close to $750,000 over the term of the loan.
“The intent is to accept the agreement with TD and accept the 10 Year Term rate of 2.25 per cent for the 10 Year loan for $6,200,000.”
Council was unanimous is supporting the recommendation.
