Despite volatile money markets, the Municipal Financing Authority (MFA), which finances BC’s municipalities was able to lend out $165 million this fall at 2.875 per cent over 10 years.
This was the “lowest (rate) that they’ve ever had”, Regional District of Nanaimo (RDN) board Chair Joe Stanhope said at their Oct. 2 meeting at the RDN offices in Nanaimo.
Stanhope said that the RDN recently borrowed about $5 million for the Nanaimo Regional Hospital, “so that’s going to affect all taxpayers in the regional district”, as the lower rates will mean lower levies. He added that the RDN will be doing quite a bit of borrowing next year, so “let’s hope that the interest rates stay low”.
“It was interesting how (well) the Municipal Finance Authority is thought of in the financial markets”, Stanhope said. “And there were some new investors … right now everybody’s only looking for safety and security”.
“So it benefits all of us”, Stanhope said. “It benefits every local government in British Columbia”.
Stanhope was expanding on a point he made at the Sept. 11 Committee of the Whole (COW) meeting when he told the board that the authority was “among the small, and growing smaller, group of bond issuers with triple A ratings in North America”. He said all BC local governments benefit from the authority’s “strong credit position”, because it can “continue to offer its members the lowest cost debt-financing” that any municipalities receive in North America. During a break at the Oct. 9 COW meeting, he said the MFA is able to get such low interest rates for BC municipalities because “the risk is so low and (loans are) solidly backed by all the property owners in British Columbia”.
“In case of a default”, Stanhope said, “we are jointly and severally liable, but the borrowing capacity of each area is closely monitored to make sure it doesn’t exceed a certain assessed value”. He said a default “has never happened and probably never could happen because the percentage that you can borrow is so low in relationship to” assessed values and the ability of local governments to pay it back.
The MFA is 40 years old, Stanhope said, and was created by the W.A.C. Bennett government when the then-premier realised that local governments were having to pay exorbitant rates to borrow money. He said the MFA “represents the 28 regional districts in the province of BC. There are 38 members on the board, because it’s weighted by population – there are more members from the Greater Vancouver Capital regional districts to get representation by population”. He said all local government have to go through their regional districts for funding.
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