ATHABASCA — In an effort to both entice homeowners to take part and to reduce the cost of borrowing, the Town of Athabasca is going to become its own banker for the Clean Energy Improvement Program (CEIP).
At the Sept. 6 council meeting CFO Jeff Dalley explained to council how foregoing a line of credit to fund the program and moving reserves into a dedicated account to cover the loans taken by participants would make the program pay for itself.
“What I'm suggesting is that we set up a reserve,” said Dalley. “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 the reserve. 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.
“So, we’re our own banker, that’s what you’re saying,” said mayor Rob Balay.
Non-negotiable is a five per cent fee from Alberta Municipalities (AM) which oversees the CEIP in the province but there’s administrative costs incurred by the Town of Athabasca as well.
“This would be the first time we've taken money out of reserves, that's actually going to slowly get paid back,” Balay said. “I guess it’s to the benefit of our residents and our businesses who take advantage of this program.”
Dalley wanted thoughts on what to set the interest rate at and Coun. Edie Yuill suggested using prime so it would go up and down as the Bank of Canada set the prime interest rate, but Balay said he would be happy with a lower rate.
“If you're comfortable with 3.5, I could live with 3.5, I could live with four per cent as well. So, I mean, it's better than prime plus one, which could end up being six per cent pretty quick,” Balay said. “So, it does create some incentive for residents to take advantage of that, as opposed to borrowing by themselves through (banking) institutions.”
Yuill made a motion for the rate to be prime minus one; a variable rate, but Coun. Sara Graling preferred a fixed rate, saying it would be easier for people to budget.
The motion passed and the program will be promoted in earnest so residents can access the low interest loans to upgrade their homes with greener windows, furnaces, and other improvements.