By Mike Williscraft
The Town of Grimsby’s most positive connection to its hydro holdings may get another year added onto a 20-year agreement.
Grimsby’s Administration and Finance Committee voted Monday night to extend the life of a promissory note set Feb. 1, 2000 with its Grimsby Power Inc. (GPI).
The promissory note was developed to allow for maximimum financial benefit to the Town as opportunities to invest for a municipality are tightly controlled to ensure safety of the public purse.
The promissory note yields an interest rate of 4.54 per cent, as determined by the Ontario Energy Board’s (OEB) deemed cost of capital for long-term debt.
The total amount of interest collected on the note since its inception in 2000 is nearly $6.4 million dollars, said Grimsby’s director of finance, Steven Gruninger.
In his report to the committee, Gruninger noted the interest rate, which was last adjusted in 2017, will be adjusted again in 2021.
“If the extension is granted, nothing will change, and the Town will continue to collect interest for another year at a rate of 4.54 per cent, or $262,537. The Town is not currently in need of the funds and the interest that will be earned on the note for the next year is higher than what the Town could earn on a similar type of investment,” according to the report.
The recommendation from Admininstration and Finance will come to Grimsby full council for consideration at its first regular meeting of 2020 next Monday, Jan. 20.
“The initial note had a term of 20 years. GPI requested a one-year extension to give them additional time to evaluate how they want to proceed with the note – i.e., refinance, pay it out, etc.,” said Gruninger.
“It will be a mutual decision taking into account both GPI’s needs and the Town’s future funding needs.”