Municipal Finance Authority Rules Explained

The City is in the midst of a referendum process to borrow $15 million to build a new fire hall and $35 million to replace the four seasons pool. that process was triggered by provincial legislation. If either or both are approved, the City would turn to the Municipal Finance Authority to borrow the money. So, what is the Municipal Finance Authority?
“It is a provincial non-profit organization and what they do is use the collective borrowing power of all the municipalities across BC and they let municipalities borrow at really good lending rates,” explains Kris Dalio, the Director of Finance for the City.
But there are strict rules around when and how much municipalities can borrow.
“It’s a formula. It’s based on 25% of our controllable revenues. What “controllable revenues” means is the existing property tax that we can expect, our existing user fees like water and sewer. But also, it includes our grants that we can expect, that we can actually count on from year-to-year. This would include our gaming revenue, our traffic fine revenue and the gas tax revenue.”
Dalio says the MFA simply wouldn’t allow a municipality to be over-extended and he says this City is far from that.
“Our City’s limit is around $450 million that we can borrow and we don’t even have a third of that yet. So, if we were to take on, let’s say, the $50 million for both the pool and the fire hall, we still wouldn’t hit the halfway mark of that capacity that we’re allowed to borrow. ”
Right now, that rate is 3%, but it can fluctuate just as any rate does. The rates are reviewed every five years.