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New energy improvement loan rate already changed

Move to a fixed rate of 3.5 per cent will make life easier for administration and cheaper for applicants
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Just days after passing the new initiative to charge interest at prime minus one, Town of Athabasca chief financial officer Jeff Dalley came back to council asking for a fixed rate saying no other municipality was using a floating rate and it would create a lot of extra work.

ATHABASCA — A newly minted motion was rescinded and replaced at the last Town of Athabasca council meeting, after it was discovered a floating interest rate for clean energy grants would cause more work for administration. 

During the Sept. 6 council meeting CFO Jeff Dalley explained to council how foregoing a line of credit to fund the Clean Energy Improvement Program (CEIP) and moving reserves into a dedicated account to cover the loans taken by participants would help the program pay for itself. 

“What I'm suggesting is that we set up a reserve,” Dalley said at the first meeting. “We take $200,000 from reserves, we put it in for the CEIP program, ... participants will take money out of that, and then when they pay it back by the taxes it goes back into (it). That's the way we keep funding it.” 

A line of credit costs the town 5.7 per cent, or prime plus one, which is passed onto the participants but using money already in the bank would allow the town to set a lower rate. 

“Rather than ... adding a line of credit to the bank, I'm suggesting we set up a modest reserve, and we flow everything through the town itself and we charge an interest rate yet to be determined, I'm suggesting maybe 3.5, or four per cent and then that way, it's a more competitive rate for the participants of the program,” said Dalley Sept. 6. 

After discussion, a motion of prime minus one per cent was passed but Dalley came back at the Sept. 19 meeting recommending a change to set a fixed rate instead. 

“If we did go with a variable rate every year, we're gonna have to get the person a new amortization schedule,” he said, adding it will be extra work to figure out at tax time as well. 

He admitted it was a mistake more research wasn’t done before the last meeting and asked for the previous motion to be rescinded and a fixed rate of at least three per cent be applied instead. 

After council rescinded the Sept. 6 motion, Coun. Dave Pacholok immediately motioned to set a fixed rate of 3.5 per cent, making it at least one per cent under what it would have been initially. 

Heather Stocking

About the Author: Heather Stocking

Heather Stocking a reporter at the Athabasca Advocate, a weekly paper in Northern Alberta. Heather covers all aspects of the news in and around Athabasca and Boyle as well as other small communities.
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