Rodney Stevens
An extraordinary meeting of Clarence Valley Council will be held so councillors can vote on authorising the General Manager to borrow $24.72 million to finish the construction of the Regional Aquatic Centre and Treelands Drive Community Centre.
At the March 26 council meeting, Cr Bill Day moved an alternate motion to the council officer’s recommendation which was seconded by Cr Ian Tiley that council:
- Authorise the General Manager to negotiate the most cost-effective loan for the general fund borrowings based on the following loan terms. a. 15 years principal and interest. or b. 20 years principal and interest or c. Five years interest only refinanced at the end of that term to 20 years principal and interest.
- Hold an extraordinary meeting to consider responses to the loan negotiations when they are received, before accepting the loan borrowings.
- Note that a resolution to affix the council seal to the loan agreement in accordance with the affixing council seal policy will be required at the extraordinary meeting.
Cr Steve Pickering then asked council’s General Manager GM, Laura Black, what effect Cr Day’s motion will have on council.
“What the changes says is that any loan borrowing offerings made by a bank be brought back to council prior to us accepting those agreements,” Ms Black said.
When Cr Debrah Novak asked council’s GM if the motion was lawful as there hasn’t been a budget allocated for the extraordinary meetings, Ms Black replied the motion is lawful but does come with risks.
Cr Karen Toms asked what the risks were in holding an extraordinary meeting to vote on accepting an offer from a financial institution, as some offers are only valid for a short time.
“The risk that results is that when a bank makes an offer they make it for a period of time, for example the Commonwealth Bank will make that offer for a period of four hours, so provided council could host an extraordinary meeting in that time, you may still get the most cost-effective loan…but if you’re unable to get together in that four hours, you may not,” Ms Black said.
Cr Day said the loan is “big by any standards” which will have a dramatic effect on ratepayers and council’s auditor last month said council general fund was not as healthy as he’d like it to be.
But GM Laura Black said a report from Earnst and Young confirmed that council has sufficient loan borrowing capacity for loans up to $88.2 million and that borrowing $24.720 million would see Council remain compliant with a conservative debt service range.
When borrowing such a large amount, Cr Tiley said it is important that the governing body understands all the options and signs off on the option or options considered best for council.
He said if the loan was up to $3 million, he wouldn’t have a problem delegating authority to the GM to accept it.
Speaking against the motion, Cr Toms said the GM must follow borrowing policy by getting three quotes, then decide the best option for council, but the quotes will be out of date by the time an extraordinary meeting is held.
She said council had already voted to approve borrowing the $24.72 million, just the terms of the loan have to be decided.
“We’ve got a policy and we’re just going to ignore the policy…we’re not going to trust the General Manager to select the best interest rate,” Cr Toms asked.
“How are we ever going to get an extraordinary meeting at the right time, within the right time frame.”
Cr Steve Pickering said he was torn but said “we can’t possibly put a decision this big on one person”.
The motion was carried 6 voted to 3, with Cr’s Clancy, Toms and Whaites voting against.