Loan extension is “sound decision”
A decision to extend the term of a $4 million loan has been described by Baw Baw Shire councillors as a sound financial decision.
The $4 million loan, originally included in council's 2016/17 budget, was used to partly fund the West Gippsland Arts Centre redevelopment.
A report to council said at the time of the loan, the intention was to implement a long term fixed rate loan of about 10 to 15 years using the MAV bond group borrowing facility.
Because of a shortfall in participating councils in the MAV group borrowing facility, Baw Baw Shire and other municipalities entered into an interim loan facility with CBA.
Officers said participating councils had been encouraged to continue utilising the interim facility due to the low interest rate and inability of the MAV group borrowing facility to proceed.
Council previously approved variations for the $4 million loan, including an 18 month extension from December 2018 to June 2020 and two 12 month extensions to June 2021 and June 2022 respectively.
“Prudent cash management enables council to fund capital expenditure and provide infrastructure for long term community benefit.
“The rollover of the $4 million loan is consistent with the current long term financial plan, the $4 million loan is shown as due for repayment at 30 June 2026, resulting in a total loan period of 10 years,” officers said.
Council also gave the chief executive officer authority to accept and sign further extensions to the loan.
Cr Peter Kostos said council could extend the loan and have money in the budget to use elsewhere.
“It is a very sound financial decision,” he said. Cr Danny Goss said it was the same loan, just different terms and he supported the CEO having authority to sign off on further extensions if needed.
“There is no reason for it to keep coming back to council because we aren't borrowing extra money,” he said.