While the unstable financial markets have many local governments in Canada and the United States struggling with their borrowing power, that is not the case in British Columbia and for taxpayers in the Regional District of Nanaimo there is some good news to report.
RDN Chairman Joe Stanhope announced at the regular board meeting on October 4 that the Municipal Finance Authority (MFA) pulled off a monetary coup that will result in a huge savings for all of the 28 regional districts and municipalities it represents.
“Considering how difficult the financial markets are right now, this is a real success story,” said Stanhope.
He is referring to the record low interest rate the authority managed to get for a 106 million dollar loan despite the fact that many other municipal borrowers in Canada and the U.S. are still sitting on the side lines not able to borrow money because of the stress the financial markets are currently under.
The MFA received approval to borrow the large sum of money recently at the Union of B.C. Municipalities (UBCM) conference in Vancouver and Stanhope said staff acted quickly once they got the go ahead and bought a 10 year bond with an unprecedented 4.5 per cent interest rate.
He said with the European banking sector under stress because of the Greek financing situation, lending rates have gone up but the MFA managed to find a brief window in the markets and got a bond at a record setting low interest rate.
He said people should realize what a success story this is because in some parts of the U.S. municipalities have invested in junk bonds and are faced with having to raise taxes 100 percent because they have not been able to pay off their borrowing debts.
Stanhope said this financing feat is significant for local taxpayers because the RDN borrowed just over $6 million dollars for the Nanoose Bay firehall and the purchase of Moorecroft Regional Park.
“For us it is good because we are paying the lowest possible interest rates in North America and we borrowed $2.8 million for Moorecroft,” he admitted.
Stanhope said the MFA is unique in Canada in that it covers all financing in B.C. and for the past 40 years it has continued to receive an excellent credit rating from Standard and Poor’s.
“We have a triple A rating from Standard and Poor’s and we have managed to maintain that rating. It is a reputation we all should be proud of,” he said.